Dave & Buster’s Entertainment (NASDAQ:PLAY) faced a tumultuous day as its stock plunged over 15% intra-day following the abrupt resignation of CEO Chris Morris and the release of underwhelming third-quarter financial results.
Morris, who assumed the CEO position after the company’s merger with Main Event in June 2022, stepped down after two years to pursue other opportunities. The board appointed Kevin Sheehan, its chair, as interim CEO while launching a search for a permanent replacement through executive search firm Heidrick & Struggles. Board member Michael Griffith will act as lead independent director during the transition.
The leadership shake-up coincided with troubling financial news. The company reported a third-quarter loss of $0.45 per share, falling short of analyst expectations of a $0.33 loss. Revenue also disappointed, coming in at $453 million versus the consensus estimate of $469.93 million. The results highlighted ongoing challenges in revitalizing the brand amid a tough economic landscape.
Despite the setbacks, Dave & Buster’s CFO, Darin Harper, noted progress on long-term strategies, citing the opening of three new locations expected to deliver strong cash returns. However, the broader narrative remained grim, as analysts slashed their outlook for the stock.
Truist Securities downgraded Dave & Buster’s from Buy to Hold and reduced its price target from $56 to $36. Analysts cited the CEO’s unexpected departure, underwhelming sales improvements from remodels, and the latest earnings miss as factors shaking confidence in the company’s ability to execute a turnaround.
While some analysts acknowledged potential upside tied to improving economic conditions, concerns about execution risks and lack of near-term catalysts led to a cautious stance. Dave & Buster’s now faces significant hurdles as it works to regain investor confidence and stabilize its leadership.