What Happened?
A number of stocks jumped in the afternoon session after the major indices rebounded (Nasdaq +1.5%, S&P 500 +1.0%) as reports pointed to easing tensions between Israel and Iran. The Wall Street Journal said senior Iranian officials had signaled a willingness to restart stalled nuclear talks, on the condition that Washington refrain from joining Israel's ongoing strikes. This development triggered a significant decline in oil prices, easing inflation concerns.
Also, it is possible some investors were buying the dip following the sell-off at the end of the previous week.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Leisure Facilities company Dave & Buster's (NASDAQ:PLAY) jumped 6.7%. Is now the time to buy Dave & Buster's? Access our full analysis report here, it’s free.
- Hardware & Infrastructure company Super Micro (NASDAQ:SMCI) jumped 5.1%. Is now the time to buy Super Micro? Access our full analysis report here, it’s free.
- Lending Software company Upstart (NASDAQ:UPST) jumped 5.1%. Is now the time to buy Upstart? Access our full analysis report here, it’s free.
- Sit-Down Dining company Texas Roadhouse (NASDAQ:TXRH) jumped 5.3%. Is now the time to buy Texas Roadhouse? Access our full analysis report here, it’s free.
- Apparel and Accessories company Figs (NYSE:FIGS) jumped 5.1%. Is now the time to buy Figs? Access our full analysis report here, it’s free.
Zooming In On Dave & Buster's (PLAY)
Dave & Buster’s shares are extremely volatile and have had 42 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 previous big move we wrote about was 5 days ago when the stock gained 14.8% on the news that the company reported first-quarter 2025 results and provided encouraging updates on sales trends, as revenue came in line with expectations. The company noted improved momentum following the reintroduction of the Eat & Play combo, adjustments to menu pricing, and changes to the incentive structure for store managers.
Additionally, free cash flow turned positive, which is a significant boost as management attempts to turn around the business. Given that markets are forward-looking, the stock's reaction suggests investors were able to look past the bottom line weakness during the quarter as operating profits and earnings fell short of Wall Street's estimates.
Dave & Buster's is up 7% since the beginning of the year, but at $32.42 per share, it is still trading 27.1% below its 52-week high of $44.47 from June 2024. Investors who bought $1,000 worth of Dave & Buster’s shares 5 years ago would now be looking at an investment worth $1,937.
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