Potbelly Corporation (PBPB) shares rose more than 15% during Thursday's session after the company announced a 75% reduction in its cash burn rate from the peak of the COVID-19 impact to mid-May. The company also announced an improvement in same-store sales in eight of the past nine weeks as customers return.
During the first quarter, Potbelly reported a 10.7% decrease in revenue to $87.59 million, missing consensus estimates by $2.05 million, and non-GAAP net losses that reached 32 cents per share, missing consensus estimates by nine cents per share. The company drew down $40 million of available capacity under a revolving credit facility in March and enacted significant capital and expense reductions. In mid-May, Potbelly announced that it was considering the closure of up to 100 shops while having conversations with its landlords.
Prior to its earnings announcement, Potbelly added David Near and Todd Smith to its board as part of an agreement with an activist shareholder group. The group had held discussions with the company about "management and corporate governance" in the past, according to an SEC filing.
From a technical standpoint, the stock briefly hit the 50-day moving average at $2.86 during Thursday's session before giving up some ground. The relative strength index (RSI) moved to neutral territory with a reading of 54.32, but the moving average convergence divergence (MACD) experienced a bullish crossover. These indicators suggest that the stock has some room to run over the coming sessions.
Traders should watch for a breakout from the 50-day moving average and trendline resistance near $2.86 toward the 200-day moving average at $3.98 over the coming sessions. If the stock moves lower, traders could see a retest of trendline support levels near $1.75, although that scenario appears less likely to occur given the rebounding same-store sales.
The author holds no position in the stock(s) mentioned except through passively managed index funds.