Dave & Buster's Stock Tests Lows After KKR Joins Board

Dave & Buster's Entertainment, Inc. (PLAY) shares fell 2% during Tuesday's session after the company appointed KKR Managing Director John Hockin to its board of directors.

Kohlberg Kravis Roberts, better known as KKR, is a global investment firm that specializes in private equity, energy, infrastructure and real estate. With a roughly 8% stake in Dave & Buster's, KKR is one of the company's largest shareholders. Mr. Hockin brings valuable perspective and deep financial and investment experience to the board.

Earlier this month, Dave & Buster's stock fell sharply after the company issued 9.6 million shares at $10.44 per share to shore up capital amid the ongoing COVID-19 outbreak. The below-market offering put downward pressure on the stock, which has stabilized at around $10.50 per share in recent sessions.

The company reported better-than-expected fourth quarter revenue of $347.16 million and earnings per share of 80 cents. It is pursuing discussions with landlords and vendors to reduce expenses, extend payment terms, and obtain other concessions to weather the economic storm.

From a technical standpoint, the stock has formed a base at around $10.50 per share over the past couple of weeks and continues to trade in a band of $10.00 to $17.50. The relative strength index (RSI) appears neutral with a reading of 40.1, but the moving average convergence divergence (MACD) is losing its bullish momentum and could see a bearish crossover.

Traders should watch for a breakdown from prior lows at around $10.00 to retest lows of $5.00 or a move higher to the 50-day moving average at $13.94 or prior highs of around $17.50. While KKR's involvement could become a bullish catalyst, future price action will likely depend on the economy's progress in reopening and how restaurants fit into the picture.

The author holds no position in the stock(s) mentioned except through passively managed index funds.

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