Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Party City Stock Crashed Today

By Evan Niu, CFA - Jan 13, 2021 at 12:35PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The party-supply company's fourth quarter took a hit due to the COVID-19 pandemic.

What happened

Shares of Party City ( PRTY 8.98% ) have crashed today, down by 13% as of 12:10 p.m. EST, after the company reported preliminary fourth-quarter results. The figures came in significantly below expectations.

So what

Revenue in the fourth quarter is estimated to be in the range of $645 million to $650 million, compared to the outlook issued in early November that called for sales of $675 million to $695 million. Analysts had been modeling for $687.1 million in revenue.

Brand comparable sales are forecast to decline in the mid-single-digit range, which is worse than Party City's guidance of "flat to down a low single digit percentage." Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) is expected to be $75 million to $80 million, down from the previous forecast of $80 million to $90 million. The company attributed the shortfall to ongoing impacts from the pandemic.

Woman shopping for party supplies

Image source: Getty Images.

"We are pleased with the progress we continued to make in the fourth quarter against our strategic initiatives to reinforce our position of authority when it comes to celebrations," CEO Brad Weston said in a statement. "However, the rapid surge in COVID-19 cases had a greater than expected impact on customer behavior in the months of November and December."

Now what

The consumer discretionary company is optimistic heading into 2021 that things can slowly return to normal as vaccine distribution ramps up. Party City expects to close on a previously announced sale of most of its international operations by the end of the month, a transaction that's valued at $59 million.

Party City provided the update ahead of participating in the ICR Conference this morning.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Party City Holdco Inc. Stock Quote
Party City Holdco Inc.
$6.19 (8.98%) $0.51

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/08/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.