What happened

Shares of Dave & Buster's (PLAY -1.44%) tumbled last month as the purveyor of eat-drink-and-play emporiums got caught up in the coronavirus sell-off. 

The chain, whose main business is arcade games and other amusements, has been hammered on fears that Americans will stay home to ride out the coronavirus outbreak. Other entertainment stocks like theaters and restaurants have also fallen.

The entrance to a Dave & Buster's

Image source: Dave & Buster's.

Dave & Buster's finished February down 25% according to data from S&P Global Market Intelligence. As you can see from the chart below, the stock was trading in line with the S&P 500 for most of the month, but then fell sharply during the last week of the month as coronavirus fears swept the market.

^SPX Chart

^SPX data by YCharts

So what

Dave & Buster's has not yet commented on the potential impact from the coronavirus. About 10% of the company's business comes from special events like birthday parties or corporate-sponsored gatherings. That kind of business would seem to be most at risk if the outbreak worsens as companies are already canceling events due to fears of the virus spreading.

The "eatertainment" chain was struggling before coronavirus fears hit as comparable sales have declined for the last several quarters. Any reaction to the virus is only likely to exacerbate its top-line challenges.

Now what

D&B shares have continued to slide through the first week of March as the market remains volatile and news about the coronavirus and the government's response remains dynamic. However, the stock did get one piece of good news. KKR, a private-equity firm that had already taken a stake in Dave & Buster's in January, doubled its investment from 6.3% to 12.7% on March 4. That briefly sent the stock higher, though the stock gave back those gains on Thursday.

KKR is behaving as an activist director and has held discussions with management to discuss potential options like a merger, asset sales, or a change in the board of directors. With the stock now trading near a five-year low, shares look cheap, but the company still needs an effective turnaround strategy, and the coronavirus could add challenges over the near term.

Keep an eye out for the company's fourth-quarter earnings report in a few weeks as that should provide some color on the company's prospects both around the coronavirus and within the business.