Krispy Kreme Stock Plummets After JPMorgan Slashes Rating to ’Underweight’

Wall Street's sugar rush turns sour as banking giant pulls support from doughnut darling.

The Analyst Axe Falls

JPMorgan just served Krispy Kreme a brutal downgrade—slashing its rating straight to 'underweight' without even the courtesy of a neutral pause. The move signals deep institutional skepticism about the company's ability to maintain its financial glaze amid rising inflation and shifting consumer habits.

Market Reaction

Shares immediately cratered on the news, wiping out gains and leaving retail investors clutching their boxes of original glazed while institutional players shorted the stock faster than you can say 'hot now.' Trading volume spiked to triple the monthly average as panic set in.

The Icing on the Cake

Because nothing says 'sound financial analysis' like downgrading a doughnut stock during economic uncertainty—as if anyone needed Wall Street to confirm that discretionary spending on sugary carbs might not be recession-proof. Sometimes the market's genius is just profoundly literal.

KEY TAKEAWAYS

• Krispy Kreme shares are dropping in morning trading Wednesday after JPMorgan downgraded the doughnut maker to an “underweight,” citing challenges to its turnaround plan.
• Krispy Kreme shares, which entered Wednesday down more than 60% so far this year to $3.73 each, went public in 2021 at $17 each.
• Krispy Kreme ended its partnership with McDonald's in July as the doughnut maker said it was unable to continue scaling it profitably.

Krispy Kreme (DNUT) shares are dropping in morning trading Wednesday after JPMorgan downgraded the doughnut Maker to an “underweight,” citing challenges to its turnaround plan.

The analysts previously had a “neutral” call with no price target for the shares, which they said had “vastly underperformed” since the doughnut firm went public in July 2021 at $17 each. 

Krispy Kreme shares, which entered Wednesday down more than 60% so far this year to $3.73 each, are tumbling about 8% in morning trading. The company announced a turnaround plan in July, after it ended its year-old partnership with McDonald's (MCD) that it said it was unable to scale up profitably.

“After reviewing the proposed turnaround plan, we believe the execution risk—specifically the duration risk to refranchise multiple international assets—remains high as underlying business trends continue to decline,” the analysts wrote. 

Krispy Kreme’s profitability was also hit, the analysts said, by the high costs linked to its McDonald’s tie-up: The company had initially intended to make its doughnuts available in all of the fast food firm’s locations by the end of 2026.

“This disruption led to the company being in survivor mode, including the sale of various store assets around the world and an attempted shift to 3P [third-party] delivery to reduce costs and operational complexity,” the analysts wrote. They said that “nearly all” of the doughnuts' appeal is in being eaten when freshly made.