Shares of Dutch Bros (BROS 0.40%) were soaring 18.9% week to date from their closing price last Friday, according to data provided by S&P Global Market Intelligence. The boost came after Jim Cramer gave the stock a positive mention Monday morning.
While the recommendation gave a 12% boost to the stock that day, the coffee shop chain gave back a few points the next day after Starbucks (SBUX 0.18%) reported disappointing earnings. Dutch Bros actually lost more than its rival, dropping almost 4% compared to Starbucks' 1% drop.
The reopened economy has bolstered visits to coffee shops again. Even the widespread proliferation of the omicron variant hasn't altered consumers' normal habits as it's becoming apparent the coronavirus will be something that we'll need to live with.
Data from Placer.ai shows visits to coffee shops continue to be strong, and almost no one is seeing a greater lift than Dutch Bros. The report notes the coffee chain's doubling in size over the past few years "has the potential to alter the balance of power between the major coffee giants."
For instance, it notes that Dutch Bros' expansion in California has led to a 170% increase in visits over the past two years, with location data from mobile devices showing that growing numbers of Starbucks and Dunkin Brands (DNKN) customers are also visiting Dutch Bros shops.
Dutch Bros went public last September at an offer price of $23 a share and closed that first day of trading north of $36. It closed yesterday at $54.75, a 138% gain in a little over four months' time. Not bad.
There's potential for it to be an exceptionally volatile stock, however, since over 7 million shares -- almost a quarter of Dutch Bros' outstanding shares -- are sold short. That is a 13% increase from the last short-interest report, when just one-fifth of the stock was shorted.
But the coffee chain's days to cover, or the short interest ratio (which indicates how long it would take short-sellers to cover their positions), stands at 3.6 days, not an especially large number. Anything over seven days is considered a lot.