What Happened?
Shares of restaurant software platform Toast (NYSE:TOST) fell 7% in the morning session as markets remained anxious about the negative impact of tariffs, with concerns intensifying following new updates from the Trump administration. Treasury Secretary Scott Bessent noted on CNBC, "We're focused on the real economy.... I'm not concerned about a little bit of volatility over three weeks." Adding to the concerns, President Trump announced on Truth Social that his administration was considering imposing a 200% tariff on all alcoholic beverages imported from European Union countries. This move was in response to the EU's 50% tariff on whisky. Trump added, "This will be great for the Wine and Champagne businesses in the U.S."
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Toast? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Toast’s shares are quite volatile and have had 17 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock gained 22.8% on the news that the company reported strong third-quarter earnings and provided an optimistic EBITDA forecast for the next quarter, which blew past analysts' expectations. While sales were in line with Wall Street's expectations, EPS and EBITDA beat more convincingly during the quarter. Sales growth was driven by an increase in the number of operational locations and higher SaaS revenue. This growth was further supported by the introduction of new product offerings, such as SMS marketing and branded apps, which effectively boosted customer engagement. Despite some pressure on annual recurring revenue (ARR), the company maintained momentum in expanding its addressable market, notably in the international and retail segments, setting the stage for sustained long-term growth. Zooming out, we think this was a good quarter with some key areas of upside.
Toast is down 10.7% since the beginning of the year, and at $32.51 per share, it is trading 25.3% below its 52-week high of $43.54 from November 2024. Investors who bought $1,000 worth of Toast’s shares at the IPO in September 2021 would now be looking at an investment worth $520.00.
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