What Happened?
Shares of restaurant software platform Toast (NYSE:TOST) fell 4.6% in the afternoon session after the company reported second-quarter results that missed analyst expectations on profitability, even while it surpassed revenue forecasts. The restaurant technology provider's earnings per share came in at $0.13, which fell short of the $0.22 that analysts anticipated. While the company added a record 8,500 new locations and raised its full-year outlook, investors focused on the earnings miss and potential future headwinds. Management pointed to increased investments and the impact of tariffs, which were expected to reduce profit margins later in the year. This outlook for tighter margins appeared to overshadow the strong revenue growth and record customer additions.
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 Toast? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Toast’s shares are quite volatile and have had 17 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 2 days ago when the stock gained 5.1% on the news that the Software as a Service (SaaS) sector rebounded following the sell-off in the previous trading session as a weaker-than-expected U.S. jobs report increased the probability of a Federal Reserve interest rate cut. The July Nonfarm Payrolls (NFP) report showed the U.S. economy added only 73,000 jobs, significantly below the 110,000 forecast. This, combined with downward revisions for May and June, signaled a cooling labor market to investors. In response, market expectations for a September interest rate cut by the Federal Reserve surged from roughly 40% to over 80%. A potential rate cut is generally favorable for growth sectors like technology and SaaS, as lower rates can increase the present value of their future earnings, boosting stock valuations.
Toast is up 25.4% since the beginning of the year, and at $45.60 per share, it is trading close to its 52-week high of $49.30 from August 2025. Investors who bought $1,000 worth of Toast’s shares at the IPO in September 2021 would now be looking at an investment worth $729.70.
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