1 Growth Stock Down 40% in 2025: Should You Buy It With $100 Right Now?

Sweetgreen (NYSE: SG) made a splash with its initial public offering (IPO) in November 2021, but not in a good way. Shares of the health-forward fast-casual chain tanked not long after their debut. Exactly two years following the company's IPO, they had lost a gut-wrenching 80% of their starting value.

While Sweetgreen failed to satisfy investors' appetites early on, it has turned things around. Since the start of 2024, shares have surged 70% (as of April 25). However, volatility remains the key theme.

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In 2025, this restaurant stock has dropped by 40%. Meanwhile, the broader S&P 500 index has fallen 6%. Does this mean you should buy Sweetgreen with $100 right now?

Focused on major expansion

Founded 14 years after Chipotle Mexican Grill, Sweetgreen brings the same emphasis on a fast-casual concept, customizable menu, open kitchen, and sustainable ingredients, but to salads and grain bowls. Plus, it plays on the growing interest in eating healthy. According to McKinsey & Company, 82% of U.S. consumers consider wellness a "top or important priority in their everyday lives."

That has given Sweetgreen a favorable growth tailwind. After opening 25 new stores in fiscal 2024, the company has a footprint of 245 locations. The target is to open at least 40 more this fiscal year.

Sweetgreen has focused on positioning itself as a tech-forward restaurant concept, demonstrated by the fact that 56% of revenue in fiscal 2024 came from digital channels in total and 30% came from its own website and app. Digital sales will likely be boosted by Sweetgreen's new points-based loyalty program that was launched in April.

What's more, the business is investing in automation. Infinite Kitchen is automated kitchen technology that uses robots to prepare food for customers. The goal is to add it to 20 of the new stores being built this year, which would bring the total to more than 30. Bringing these to more stores has a direct positive benefit to Sweetgreen. Infinite Kitchen helps to lower costs, while at the same time boosting throughput (a measure of how fast customers are served). That's a win-win situation.

Besides these more noticeable moves, Sweetgreen also tries to keep things fresh on the menu. In March, the company added Ripple Fries, potatoes air-fried in avocado oil. Jonathan Neman said the business wants to "increase the pace of menu innovation."

Risks to the Sweetgreen story

Due to fears about the direction of the economy, with many now thinking a recession will happen, it makes sense that Sweetgreen's stock has gotten hammered in 2025. If consumers tighten their belts and decide to cut back on eating out, this business could see demand come under pressure.

This depressed view has hit the stock's valuation, which now trades at a more reasonable price-to-sales ratio of 3.3. I can understand why this might be enticing to some investors looking to buy a growth stock on the dip.

However, I'm not entirely convinced that growth will be durable. Since the average meal at Sweetgreen costs substantially more than at a rival like Chipotle, I believe it somewhat caps the former's total addressable market. The leadership team expects same-store sales to rise by just 1% to 3% this year, demonstrating economic sensitivity.

It doesn't help that Sweetgreen has yet to turn a GAAP profit. It registered a $90 million net loss in fiscal 2024. Maybe with greater scale that will change, but it could be a long road to get there. The industry is extremely competitive as well, which will make things difficult for Sweetgreen.

I don't think investors should buy the stock. Maybe when I see consistently increasing earnings, that perspective will change.

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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends Sweetgreen and recommends the following options: short June 2025 $55 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.