Appetite for reopening?

05/12/21
  • PAR corrected after 728% rally off March 2020 lows
  • Restaurant tech provider made strategic acquisition last month
  • Post-earnings sell-off on Tuesday dropped stock near support

Given the hospitality industry was one of the biggest casualties of pandemic lockdowns, it may come as a surprise that a stock that specializes in tech for the restaurant business gained more than 700% between March 2000 and February 2021.

But that’s the story of PAR Technology (PAR), which gained 140% in just the final three-and-a-half months of that run when it closed at $88.71 on February 22:

Chart 1: PAR Technology (PAR), 9/23/20–5/11/21. PAR Technology (PAR) price chart. Approached support at prior lows.

Source: Power E*TRADE


Of course, the stock also tumbled 69% at the beginning of the COVID lockdown last year, and its accelerated November-December rally unfolded as vaccine progress fueled hopes that the shackles were about to be removed from the hospitality industry.

PAR is off more than 25% from its February record close, however, with yesterday’s 13% post-earnings sell-off (small earnings and revenue misses1) adding the exclamation point to the stock’s latest retreat toward a zone (roughly $58-$61) that has supported prices since the end of last year.

Despite the restaurant industry’s ongoing challenges, PAR has not been idle the past few months. In early April the company announced it was buying loyalty and guest-engagement company Punchh for $500 million2—news that helped catapult shares off its late-March lows.

For potential traders and investors, the question now may be whether PAR’s latest sell-off has created a disconnect in light of the restaurant industry’s potential to accelerate its rebound as the summer dining season approaches.

While that may be an open question, another part of the story is a bit more concrete. PAR’s options implied volatility was still above average on Monday, suggesting that option premiums had yet to see any post-earnings “cool-down” as described here yesterday:

Chart 2: PAR Technology (PAR) implied volatility profile. IV average to slightly elevated.

Source: Power E*TRADE


For options traders, that’s always food for thought.

Market Mover Update: US home prices increased by the largest amount on record (16.2%) in the first quarter—topping the previous record from Q4.3 Homebuilder stocks tumbled yesterday, one day after the S&P homebuilders index hit an all-time high, as lumber, copper, and other commodities turned back to the upside.

Ubiquiti (UI) held up better than most of tech during Monday’s sell-off, and yesterday it went one better, banging out a gain while the Nasdaq 100 (NDX) closed in the red (see “Options for tech traders”).

Today’s numbers include (all times ET): Mortgage applications (7 a.m.), Consumer Price Index, CPI (8:30 a.m.), EIA Petroleum Status Report (10:30 a.m.).

Today’s earnings include: Applied Materials (AMAT), Wendy's (WEN), Dillard's (DDS), Vroom (VRM), Lemonade (LMND).

Today’s IPOs include: SimilarWeb (SMWB), Global-E Online (GLBE).

 

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Zacks Equity Research. PAR Technology (PAR) Reports Q1 Loss, Misses Revenue Estimates. 5/10/21.
2 CNBC.com. Par Technology could be a dominant force after $500 million acquisition, Panera founder says. 4/8/21.
3 Bloomberg.com. U.S. Home Prices Surge the Most on Record in Buying Frenzy. 5/11/21.

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