How Dutch Bros Stock Gained 23.8% Last Month
Key Points
Dutch Bros shares climbed from $56 to over $65 between June 10 and June 11, with trading volume hitting roughly 6 million shares per day.
Short interest sat at approximately 44.5% of float heading into June, setting the stage for a classic short squeeze.
With short interest now significantly reduced, future gains will likely depend on operational execution rather than squeeze mechanics.
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Dutch Bros (NYSE: BROS) shares gained 23.8% last month. The stock surged from approximately $56 to over $65 between June 10 and June 11. Trading volume during those two sessions reached roughly 6 million shares per day, well above the stock's typical average.
According to data from S&P Global Market Intelligence, this marked one of the coffee chain's biggest two-day surges since Dutch Bros went public in 2021. Combined with two high-volume spikes in the second half of the month, Dutch Bros treated shareholders right in June.
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A perfect storm (the good kind)
Credit the June 10 Consumer Price Index report for getting things started. Inflation came in cooler than expected, and growth stocks across the board caught a bid. As a consumer-discretionary name amid an ambitious expansion, Dutch Bros fits the profile perfectly.
However, macroeconomic tailwinds only tell part of the story. Dutch Bros entered June with short interest representing roughly 44.5% of its float. When shares began climbing on the inflation news, short sellers rushed to cover their positions, creating a feedback loop that amplified the price gains and drove unusually high trading volume. I've seen more intense short squeezes, but it was still a classic example of that trading pattern.
The company's own story helped too. A Q1 earnings beat in May, raised full-year revenue guidance ($2.05 billion to $2.08 billion), and plans for at least 185 new locations this year gave investors something to point to beyond just a nice inflation report. The company's expansion into Chicagoland and continued mobile ordering rollout added to the sense that Dutch Bros is still in growth mode.
There's one notable wrinkle in Dutch Bros' bullish June story. Insiders were selling into the rally. Executive Chairman Travis Boersma and CEO Christine Barone offloaded about 1.5 million shares over those two days of intense trading volume. Before anyone panics, the sales were executed through pre-arranged Rule 10b5-1 trading plans. In other words, the executives were simply monetizing some of their Dutch Bros holdings according to plan.
The market shrugged it off and kept buying.
Image source: The Motley Fool.
So now what?
The June rally dropped Dutch Bros' short interest considerably. The easy gains from squeeze mechanics are probably in the rearview mirror. That's not necessarily bad news; it just means Dutch Bros stock will need to move on fundamentals from here rather than benefiting from an amplified short-squeeze panic.
The underlying investment thesis remains the same: Dutch Bros is a high-growth coffee chain executing an aggressive expansion strategy. Its friendly customer service plus the low cost of building and maintaining small drive-through shops add up to a vibrant growth story. The stock is just a bit more expensive than it was in early June.
For anyone considering Dutch Bros stock from the sidelines, the calculus is simple: if the growth thesis appealed to you before, it should still look tempting now. If it didn't, a temporary short squeeze shouldn't make you an instant bull anyway.
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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Dutch Bros. The Motley Fool has a disclosure policy.
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