What happened 

Shares of Dave & Buster's Entertainment (PLAY 1.20%) plunged a whopping 60.4% in March, according to data provided by S&P Global Market Intelligence, and didn't stop there. The stock has fallen another 22% in the first three trading days of April, and if stores remain closed because of COVID-19, the company's future could be in jeopardy. 

So what 

As COVID-19 spread throughout the U.S., it eventually shut down Dave & Buster's locations across the country. By the time April arrived, the company had closed its 137 stores and furloughed over 15,000 hourly staff. Management had also taken pay cuts of 50%, including slashing directors' cash compensation to $0 for the rest of the year. 

A group of people playing pool in an arcade.

Image source: Getty Images.

Ironically, management announced fiscal fourth-quarter results in March and they were surprisingly strong. Revenue rose 4.6% to $347.2 million and comparable-store sales were up 4.7%. Net income was $25 million, or $0.80 per share. But none of that mattered as stores began to shut down. 

Now what 

What investors are trying to figure out is where Dave & Buster's goes from here. Management is seeking relief from landlords and exploring the sale of debt or equity to investors. All new funding and cost-cutting measures are on the table. 

Investors are trying to determine whether Dave & Buster's will be able to make it through this crisis. The company's net margin of 7.4% is concerning even if operations open soon because customers may not return for a while. I don't see this as a time to make a bet on a recovery and would wait to see how Dave & Buster's weathers the COVID-19 pandemic.