What Happened:

Shares of discount grocery store chain Grocery Outlet (NASDAQ:GO) fell 23.9% in the morning session after the company reported first-quarter earnings results. Adjusted EBITDA missed by a meaningful amount, and the company's full-year earnings forecast missed analysts' expectations. The company also called out systems conversion issues, which negatively impacted profit. On the other hand, Grocery Outlet beat analysts' revenue expectations during the quarter, driven by an increase in transaction count, and partially offset by a decline in average transaction size. Overall, this was a mediocre quarter for Grocery Outlet.

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What is the market telling us:

Grocery Outlet's shares are not very volatile than the market average and over the last year have had only 1 moves greater than 5%. Moves this big are very rare for Grocery Outlet and that is indicating to us that this news had a significant impact on the market's perception of the business.

The biggest move we wrote about over the last year was 6 months ago, when the stock  dropped 8.6% on the news that The company reported third quarter results with revenue falling short of Wall Street's estimates, driven by worse-than-expected same-store sales. The company also lowered its full-year adjusted EBITDA and EPS guidance, partly because of investments in new technology platforms to synchronize its operations. On the other hand, Grocery Outlet exceeded analysts' adjusted EBITDA and EPS expectations during the quarter. Overall, this was a mixed quarter for Grocery Outlet.

Grocery Outlet is down 22.5% since the beginning of the year, and at $21.05 per share it is trading 39.3% below its 52-week high of $34.68 from August 2023. Investors who bought $1,000 worth of Grocery Outlet's shares at the IPO in June 2019 would now be looking at an investment worth $739.74.

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