What’s the Story?
Weber (NYSE:WEBR) stock jumped on Monday as the grill manufacturer announced strong financial results for its fiscal third quarter of 2022. Since the results have already been released, the market is probably not reacting positively. WEBR (NYSE:WEBR) stock was up 12% as of 11:45 a.m. ET today, perhaps because the market is pleased by the company’s cost-saving measures.
Reason for the Stock Gain?
With net sales of $528 million in the third quarter, Weber (NYSE:WEBR) saw a significant decline (-21%) year-over-year. However, this should not have come as a surprise, given that the business had already disclosed preliminary third-quarter results on July 25. Earnings for the third quarter were also within projections.
Adjusted EBITDA for outdoor grills-manufacturer fell at a far quicker rate than sales. Contrasted with the $134 million it made in the same period last year, its adjusted EBITDA in the third quarter was just $11 million. There is now a surplus of barbecues since fewer people are purchasing them. Management at Weber has reduced prices to clear off stock. Additionally, Weber’s bottom line has taken a significant hit due to price cutting due to inflation.
The story of the day wasn’t the difficulties experienced during the third quarter but rather the measures taken by management to address such issues. Beginning in fiscal 2023, the company will implement measures to reduce expenses by at least $110 million. These include eliminating the dividend and finding cheaper raw materials and administrative staff sources.
The market has lost faith in WEBR (NYSE:WEBR) stock. About 40% of the company’s float was sold short, meaning investors were betting against Weber, as reported by Yahoo! Finance. While this $110,000,000 improvement was welcomed, the market wasn’t expecting it. Stock in Weber rose today for this exact reason.
What’s Next for Weber?
Nearly two years ago, a group of investors became fixated on the idea of creating a “short squeeze” by seeking out and purchasing companies with unusually high levels of short interest. There’s little doubt that WEBR is a good match, and if investors continue to rush in and shorts cover, the stock might rise much more soon.
Short squeeze potential isn’t why I’d purchase the company (NYSE:WEBR) stock; it’s the company’s strong fundamentals. The corporation has hit hard times; that much is certain. However, other companies financial reports demonstrate the issue isn’t exclusive to WEBR.
For this reason, the company’s difficulties in 2022 may be short-lived. WEBR’s (NYSE:WEBR) efforts to reduce expenses may pay off in spades if revenue recovers.
About Weber
Weber Inc. is a company that specialises in outdoor cooking and manufactures and distributes products, accessories, consumables, and services for outdoor cooking in international markets including North America, Europe, and Australia. In addition to charcoal and gas grills, smokers, pellet and electric grills, and the Weber Connect Smart Grilling Hub, the company’s products also include accessories, consumables, and services. The company markets its wares through an omni-channel network that includes wholesale, direct-to-consumer, and internet-based retailing platforms respectively. The company began operations in that year and currently has its headquarters in Palatine, which is located in the state of Illinois.
Stephen Weber founded the barbecue division of the Weber Brothers factory in response to the overwhelming demand for the grill shortly after he began selling it in the year 1952. In the late 1950s, Stephen purchased the Weber Brothers factory and became the sole owner of the business. He subsequently focused all of his professional efforts on the production and sale of the Weber kettle. Almost immediately after that, Stephen changed the name of the business to Weber-Stephen Products Co.
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Author Shariq Khan 
