Dave and Buster’s $PLAY: Same Price as When There Was a Virus That Didn’t Let Anyone Go Outside

$PLAY - $10.65 share price at 52 week low.

Full disclosure I’ve been practicing catching knives on this one for a while but I don’t get how this price makes sense. Going outside isn’t illegal last I’ve heard.

Dave and Busters has a 29% short interest. The market cap is $370 million with an EV to Sales of 1.8X (If you include lease obligations in enterprise value its even better if you do not). The management team’s projection of free cash flow is $200 million before new store openings. In theory they could buy their market cap in 2 years. None of their debt comes due soon.

They have Q4 earnings on Tuesday after market close which is earlier than usual. The past 2 years the earnings fell in early April. You would think earlier means positive news. With how depressed the stock has been a positive or not as bad as expected surprise seems likely to me.

Interestingly the stock has only fallen since earnings announcement. At first I felt the market must know something and maybe they do but on March 22nd they were removed from the sp600 index which seems like arbitrary selling pressure. Seems more likely mechanical from index removal.

Same store sales have been declining since 2024 but the rate of decline has been decreasing from the worst quarter of -9% to the latest quarter of -3%. They have a new CEO Tarun Lal who has been there since July. He was president of KFC US so should lead to chicken tendies. He will want his first full fiscal year to have an exciting game plan with positive guidance.

He bought $250k of shares at $30 when he joined. There have been other big insider purchases way above the current price.

I think it’s crazy cheap and a great entertaining venue that faired fine in the great financial crisis why shouldn’t it be fine now?