What Happened?
Shares of fast-food chain Jack in the Box (NASDAQ: JACK) fell 9.1% in the afternoon session after the company announced the sale of its Del Taco subsidiary for $115 million, a steep discount from its original purchase price. Jack in the Box had acquired the taco chain for $575 million in 2021, meaning the sale represented a substantial loss on its investment. The decision followed a period of poor performance for both brands. Del Taco's same-store sales had declined for six consecutive quarters, and Jack in the Box's own sales performance had also deteriorated, posting its worst results in years in a recent fiscal quarter. The company stated the sale was a move to return to simplicity and focus on its core brand. It planned to use the proceeds to pay down debt amid concerns about its financial health, including a high level of leverage and potential liquidity constraints.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Jack in the Box? Access our full analysis report here.
What Is The Market Telling Us
Jack in the Box’s shares are extremely volatile and have had 44 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago when the stock dropped 4.7% on the news that President Donald Trump threatened to impose "massive" tariffs on Chinese products, reigniting trade war fears. The unexpected social media post was a stated countermeasure to Beijing's recent announcement of new export controls on rare-earth minerals. These minerals are critical components for manufacturing everything from consumer electronics to jet engines, and the news jolted a previously calm Wall Street. The renewed fears of a trade war sent all major indices into negative territory. The tech-heavy Nasdaq Composite saw the steepest decline, falling 1.7%, as investors weighed the potential impact of supply chain disruptions for key manufacturing components.
Jack in the Box is down 56.7% since the beginning of the year, and at $17.73 per share, it is trading 65.6% below its 52-week high of $51.52 from November 2024. Investors who bought $1,000 worth of Jack in the Box’s shares 5 years ago would now be looking at an investment worth $202.78.
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