What happened

Shares of Dutch Bros (BROS -3.56%) were scorching hot in October, climbing 76% according to data from S&P Global Market Intelligence.

A combination of a bullish round of analyst ratings and data showing the company is seeing tremendous growth sent the stock soaring. 

As you can see from the chart below, the stock gained pretty steadily over the last three weeks, showing investor interest building for the recent IPO.

BROS Chart

BROS data by YCharts

So what

Shares of the Oregon-based, drive-thru coffee chain started rallying on Oct. 11 when the quiet period on analyst ratings expired and a slew of Wall Street banks weighed in positively on the stock. Piper Sandler's Nicole Miller Regan gave the stock an overweight rating and a price target of $60, saying that the company should be able to grow its store base by double-digit percentages over the coming years as it aims to open 4,000 locations. Baird analyst David Tarantino called Dutch Bros a "differentiated brand" and said it was poised to grab market share in the takeout coffee industry. All told, 11 analysts gave the stock a buy equivalent rating, while just one gave it a hold equivalent, and the stock finished up 15% on the news.  

A Dutch Bros. coffee shop.

Image source: Dutch Bros.

The following week, the stock popped again after location-based data analysis firm Placer.ai said in an interview on Yahoo! Finance that visits to Dutch Bros had more than doubled in September from pre-pandemic levels, which unsurprisingly sparked another round of enthusiasm for the stock. Shares gained 13% on Oct. 19. 

Finally, the stock jumped again on Oct. 29, gaining 11%, though there was no significant news out on the company that day. Instead, a post-earnings sell-off in Starbucks stock after the coffee giant missed sales estimates may have prompted renewed buying in Dutch Bros stock.

Now what

Dutch Bros stock pulled back in the first week of November, falling 11% through Nov. 8, a sign that investors think the stock may have gotten overheated. The coffee stock is likely to swing big one way or the other when the company reports third-quarter earnings on Nov. 10.

Dutch Bros had less than 500 stores at the end of the second quarter and was only operating in 11 states, so the chain has plenty of room for growth. But a number of promising restaurant stocks have fallen by the wayside after their growth didn't live up to expectations. We'll learn more later this week when the coffee chain delivers its first earnings report as a public company.