Sweetgreen’s Up 185%, But Does Their CEO’s $6 Million Dump Signal The Bubble’s About to Burst?

Who knew $18 salads could be so... lucrative? Sweetgreen—the fast-casual salad chain with 221 locations dreaming to hit 1,000 by 2030—has seen its stock soar by a crazy 185% this year, proving that the market loves greens in more ways than one. 

But before we dive into the digits, here are a few fun facts: Sweetgreen was cooked up in a college dorm room back in 2007 by three students who wanted to make healthy food more convenient—though definitely not cheap. Fast forward to today, and they’re the first-ever publicly traded salad chain, making their Wall Street debut in 2021. And, to top it off, they’ve landed on Fast Company's list of the World's Most Innovative Companies. Not bad for a business that literally sells rabbit food, right?

Sweetgreen is on a mission to hit profitability by 2024, and it’s cutting costs left and right to get there—slowing down growth, trimming management layers, you name it. But here's where it gets interesting: they’re going all-in on robots. Yep, their first "Infinite Kitchen" in Naperville, Illinois, has a robot slinging salads with hopes that it can make up to 500 per hour. And with plans for over half of new locations to feature these salad-bots next year, Sweetgreen is banking on automation to boost profits. Why pay a human to toss your kale when a robot can do it just as well. 

Despite the fancy tech, Sweetgreen’s still hemorrhaging cash. Revenue jumped 21% year-over-year to $184.6 million in Q2, thanks to new menu items and those wallet-draining salads. But even with those high prices, they’re losing about $1.31 for every $15 of revenue. Sure, that’s better than last quarter’s $2.56 loss per $15, but it’s clear they’re still a long way from turning a profit.

I guess you could say their core restaurant operations are doing alright, with a 22% profit margin at the restaurant level, carried by tasty new additions like caramelized steak salads. However, when you factor in overhead, depreciation, and those pesky pre-opening costs, it’s clear the company still has a way to go.

Not to mention, some investors are feeling a bit uneasy after seeing what went down with Sweetgreen's CEO, Jonathan Neman. He recently sold over $6 million in stock, which has people wondering if he's still got faith in the company’s future. The official line is that this was just a "sell to cover" move—a routine way to handle tax obligations. But let’s be honest: seeing the guy at the top offload that much stock is bound to raise a few eyebrows. And it did—Sweetgreen’s stock took nearly a 12% hit last week. 

Investors are split on Sweetgreen's future. Oppenheimer's feeling good, betting on the company's growth and margin strategies. On the flip side, Piper Sandler just downgraded the stock from "Overweight" to "Neutral." They see some operational improvement, but think the market might have already baked in those gains.

Sweetgreen’s salad empire might be expanding, but to keep that stock price soaring, they’ll eventually need to turn a profit. Despite a 185% stock surge this year, the company’s financial struggles are raising eyebrows. Last week’s 12% drop after the CEO sold $6 million in stock is a warning—without real earnings, the market’s love for Sweetgreen could wilt fast. Investors won’t stick around if profits don’t start showing up soon, and when the selloff begins, it could get ugly.

Oh, and before I forget, let’s give a massive high-five to all our Stocks.News premium members! Our latest breaking alert, NYSE: TOVX, experienced a squeeze (as we expected) and skyrocketed from $3.56 to $7.15 right after Friday’s opening bell, racking up a 110% gain in under 24 hours. Keep an eye out for our next alert TOMORROW. Could it be another 100%+ gain in less than a day? There’s only one way to find out.

If you’re not a premium member, hurry and upgrade immediately to get in on the action - especially considering that our last three previous “secret alerts” all exploded to peak moves of +110.10%, +185%, and +300%... in LESS than 48 hours! 

Stocks.News holds a position in Sweetgreen.