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Why Dave & Buster's Entertainment Stock Plunged 16.3% on Monday

By Travis Hoium - Updated Mar 30, 2020 at 5:30PM

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The shutdown of restaurants nationwide doesn't look like it'll end soon.

What happened 

Shares of entertainment and restaurant company Dave & Buster's Entertainment (PLAY -0.16%) plunged as much as 17.7% in trading Monday as investors fled the industry. Shares closed down 16.3%, despite the S&P 500 climbing 3.4% on the day. 

So what

There wasn't much specific news about Dave & Buster's outside of announcing that fiscal fourth-quarter 2019 results will be released after the market close on Thursday. That's really when we'll get an idea how COVID-19 is affecting the business. 

Skee ball at an entertainment venue.

Image source: Getty Images.

More worrisome is the fact that over the weekend, President Trump extended federal social-distancing guidelines through the end of April, abandoning his previous hope that people could get back to "normal" life early in April. Then today, Maryland, Virginia, and Washington, D.C., issued stay-at-home orders because they see the outbreak of COVID-19 getting worse. If that tone is any indication, this pandemic is far from over. 

Now what

Dave & Buster's has a lot of questions to answer on Thursday because it's currently racking up operating costs without revenue at most of its locations. And at the rate we're going, the restrictions on restaurants and places of entertainment may last for months. I wouldn't jump on the recent discount in shares without having some certainty on the future, and that might not come for a while. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool recommends Dave & Buster's Entertainment. The Motley Fool has a disclosure policy.

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