Olo stock plunges toward record low after disappointing results, outlook trigger analyst downgrade

Shares of Olo Inc. OLO, -36.41% plummeted 32.3% toward a record low in premarket trading Friday, after the restaurant-ordering technology company’s disappointing second-quarter results and outlook prompted Stifel Nicolaus analyst Brad Reback to cut his rating. The company reported late Thursday a net loss per share that more than tripled to 7 cents from 2 cents, while excluding nonrecurring items, it reported a per-share profit of 1 cent to beat the FactSet consensus for breakeven. Revenue grew 27.0% to $45.6 million, but missed the FactSet consensus of $45.8 million. For 2022, the company cut its revenue outlook to $183 million to $184 million from $195 million to $197 million. Stifel’s Reback downgraded Olo to hold from buy and lowered his price target to $9 from $12, as the results and guidance reflected elongated sales cycles and slower-than-anticipated deployment schedules at existing customers. “Additionally, management disclosed Subway (~15K locations) has begun the process of replacing Olo’s Rails product with a homegrown solution (2.5k locations moved in 2Q with the remaining expected in 1Q23),” Reback wrote in a note to clients. The stock has rallied 15.9% over the past three months through Thursday, while the S&P 500 SPX, +1.73% has gained 7.1%.