Disclaimer: Please be aware that I am not a financial adviser and I do not take responsibility for any financial decisions you make. This advice is speculation and it is very difficult to predict the stock market. Do your own research and make responsible financial choices.
Dave and Buster’s Temporarily Closing
Because of the current state of the pandemic in the world, Dave and Buster’s has decided to temporarily close all Dave and Buster’s locations. They do not give a date of when they will reopen but they said as soon as it is safe to do so.
Dave and Buster’s released the statement below on their website regarding this issue.
This decision of closing was definitely for the best in regards to safety for the public. I assume all other arcades and entertainment businesses will be closing down during this time to reduce the risk of infection in the community.
Of course this brings a lot of speculation on the future of these entertainment companies. Can they survive not producing income for a few months or even longer? It has already had a large impact on the finances for Dave and Buster’s.
I want to take a look at Dave and Buster’s stock in the past months to research the trends. I will provide the reasons why I think now (April 2020) would be a good time to invest in Dave and Buster’s stock.
Dave and Buster’s Stock Symbol and Market History
Dave and Buster’s has shares on the NASDAQ stock exchange that are traded under the symbols PLAY. Because of the recent pandemic and stock market crash the price of shares is lower now than it was when it had its first initial public offering(IPO). Dave and Buster’s IPO sold shares in the price range of $16-18. The price per share as of March 2020 is much lower.
Dave and Buster’s Stock at the Highest
The below graph shows the last 6 months from March 31, 2020 of Dave and Buster’s stock market value per share. Highlighted is the highest price per share which happened just a few months ago on January 17, 2020. The price per share on that date was $47.37.
In the next section I will go into the massive dip in price shown on the right most side of the forecast chart below.
Dave and Buster’s Stock at the Lowest
Because of the recent market crash the Dave and Buster’s (PLAY) stock has hit it’s lowest price on March 18, 2020. Below you can see that on that date the price per share was at $4.87. That is less than $5 a share! This is insanely low, especially comparing it to the highest price(shown above) just a few months ago.
It is difficult to say if the price per share will ever recover to where it was at in January of around $45. But let’s say that it does recover and you bought shares at the lowest price of around $5. Your money invested will be multiplied by 9!
Again, there is so much uncertainty with everything going on so it may be a stretch to say that the price will return to that value. There is even a real possibility of Dave and Buster’s(along with most other arcades) going out of business and you could lose all the money you invested.
Let me explain why I think Dave and Buster’s will survive this pandemic and market crash.
Dave and Buster’s Will Have Less Competition with Other Arcades
If any arcade will survive social distancing and the results of no one being able to go out and play at the arcades it will be Dave and Buster’s. They are the largest arcade in the US and have the largest market share of all arcades.
It is going to be a really tough time for all entertainment businesses. I hope that none go out of business from the lack of cash flow. The reality is that some, if not most, will not survive this pandemic.
I believe mom and pop arcades will be the first to go. I hope that they can pull through, but they do not have the resources and emergency funds like other big arcade companies such as Dave and Buster’s.
Once everything is back to normal and people can venture back to arcades then Dave and Buster’s will be one of the last arcades available for consumers. This will make it so Dave and Buster’s is the only option in town for arcade gaming. I think that Dave and Buster’s will thrive once the competition is gone.
Taking the space of arcades that could not compete is not new for Dave and Buster’s. Dave and Buster’s actually got their start by acquiring locations from other bankrupt arcades.
Dave and Buster’s Popular Time is in the Winter
Kids have more free time in the summer. The weather is nicer and so they do more outdoor activities. There is a decent amount of business for arcades in the summer but that is not when they get a majority of costumers.
Arcades do well in the colder months. This is because people want something to do inside when the weather outside is not the best.
We can see through years of market trends that Dave and Buster’s is usually doing well as a business in October-April.
Below is Dave and Buster’s stock price value of the past 5 years. The history of the market summary shows increases in value of shares in the fall through spring months. The lower dips happen in the summer.
Hopefully things will be back to normal by the end of the summer. If that happens then Dave and Buster’s will still have customers coming in during the time where it will really help them as a business.
The Future of the Arcade Industry
Many things are uncertain. Things change daily. The best we can do is listen to scientists and experts to stay in our homes to prevent further spread of the virus.
Arcades, along with many other businesses, are struggling right now. We can help by buying gift cards online to create cash flow for these companies.
I hope that arcades survive this hard time. When shelter in place is over and the fear of spreading the virus is gone we will need arcades to be there to entertain and provide an escape from being cooped up in our homes.