Shares of golf club maker and entertainment company Topgolf Callaway Brands (MODG -0.50%) plunged as much as 18.8% on Thursday after announcing third-quarter 2023 financial results. Shares didn't recover much by the afternoon and are down 15.1% at 1:40 p.m. ET.

Topgolf Callaway's results

Revenue was up 5.4% in the quarter to $1.04 billion, but net income dropped 23% to $29.7 million, or $0.16 per share. Analysts were expecting revenue of $1.06 billion and earnings of $0.12 per share.

For the fourth quarter, management expects revenue to fall from $847 million to $872 million, well short of the $1.01 billion that analysts were expecting. And it's this guidance figure that had investors selling the stock this morning.

Topgolf's disappointing outlook

Management had previously expected mid-to-high-single-digit same-store sales growth at Topgolf, but now they are guiding for revenue to be down slightly. That's resulted in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance for 2023 to be reduced from $315 million to $325 million to a range of $280 million to $290 million.

Topgolf was supposed to be the company's growth engine, with strong unit economics and big plans to grow the company's footprint. But that's now being called into question, given these results.

If sales at Topgolf continue to fall, we could see the stock fall further, but Topgolf Callaway now has an enterprise value-to-EBITDA multiple of under 7, so there may be value in the stock long term.