Investors Are Buying Into Sweetgreen Again—Should They?

Key Points

• Sweetgreen shares have surged more than 60% over the past three months despite another disappointing earnings report, suggesting investors may be looking beyond recent results and focusing on signs of a turnaround.
• While Wall Street remains cautious, improving traffic trends and early signs of progress in the company's turnaround plan seem to have fueled optimism around the stock.
• Analyst upgrades, declining short interest, and insider buying all suggest confidence in Sweetgreen may be starting to improve.

Shares of Sweetgreen Inc. NYSE: SG have surged 60% over the past three months, rebounding from a steep selloff that began in late 2024 as concerns about slowing consumer demand mounted. The rally has some questioning whether the company's efforts to revive the business are finally gaining traction or if the stock is simply rebounding from deeply oversold levels.

Sweetgreen's core business remains unprofitable, and the company has missed Wall Street expectations more often than not since going public, including the most recent quarter, reported on May 8.

However, encouraging comments about its turnaround efforts seem to have sparked fresh optimism.

Sweetgreen Shares Have Surged Since Hitting March Low

The fast-casual chain, known for its salads and other healthy menu items, went public in late 2021, and its shares initially soared. However, the gains were short-lived, and the stock spent much of the next few years under pressure as the company struggled to turn a profit.

In 2024, things started to look up. The stock went from trading around $10 in January to above $44 by November. But as concerns about slowing consumer demand emerged, those gains quickly unraveled. By March 2026, the stock had plunged to an all-time low of $4.49. Since then, shares have rebounded sharply, surging nearly 100%.

The catalyst doesn't appear to be the company's most recent earnings report. Sweetgreen posted a first-quarter loss of 27 cents per share, wider than the 21-cent-per-share loss reported a year earlier and Wall Street's estimate for a 23-cent loss. Revenue of roughly $162 million fell nearly 3% year over year and missed expectations by about $2 million. The results marked the company's fourth consecutive earnings and revenue miss and its third straight quarter of declining revenue.

Turnaround Plan Is Showing Signs of Traction

Despite the disappointing earnings report, the company's comments on its Sweetgrowth Transformation Plan, launched in November 2025 to help turn the business around, appeared to spark optimism among investors.

During the earnings call, co-founder and Chief Executive Jonathan Neman said, "We are beginning to see signs that the actions we are putting in place are gaining traction. We are seeing improvement in execution across our restaurants, greater consistency in the guest experience, and stronger alignment across our teams."

He added, "We saw improvement as the quarter progressed with a further step up in April."

Neman also expressed enthusiasm about the recent addition of wraps to the menu, which he described as Sweetgreen's "most significant menu expansion in several years." The company expects wraps to help drive traffic while making the brand more accessible because of its lower price point.

Sentiment Has Improved, But Wall Street Remains Cautious

Investors appeared encouraged by the company's comments about improving trends. In the weeks following the report, five analysts raised their price targets on the stock, while two upgraded their ratings.

Even with the recent upgrades, Wall Street remains somewhat cautious. The consensus rating on Sweetgreen is Hold, based on 12 Hold ratings, four Buys, and three Sells. The majority of analysts aren't anticipating upside over the next year. The average 12-month price target of just above $8 is roughly 5% below the current share price. Price targets range from a low of $4.50 to a high of $15.

There are other indicators that suggest sentiment may be improving as well. The number of shares sold short has fallen from roughly 25 million, or nearly 27% of float, at the end of March to less than 20 million, or roughly 20% of float, as of the most recent reporting period at the end of May. While the stock remains heavily shorted, some bearish investors appear to be backing away from the name.

Insiders also appear to be expressing confidence in the company. Over the past three months, Sweetgreen insiders purchased roughly $3.4 million worth of company stock. No insider sales were reported.

Despite Recent Rally, Stock Remains Well Below Highs

Even after the recent rally, Sweetgreen shares are still trading around $9, well below their July 52-week high of $16.70 and far below the more than $44 level reached in November 2024.

The stock's steep decline has left Sweetgreen trading at a discount to several peers in the fast-casual restaurant sector, which could help explain the renewed interest in the shares.

On a price-to-sales basis, Sweetgreen stock trades at less than 1.6X sales, compared with roughly 8.3X for CAVA Group Inc. NYSE: CAVA, 3.4X for Chipotle Mexican Grill, Inc. NYSE: CMG, and 6.1X for Wingstop Inc. NASDAQ: WING. Shake Shack Inc. NYSE: SHAK, which plummeted after reporting disappointing Q1 results, is the closest comparison, trading at 1.7X sales.

Sweetgreen's rebound likely began as investors saw value in a stock that had been heavily sold off. More recently, however, signs of progress in the company's turnaround efforts appear to have provided additional support for the rally.

While the company's financial results still leave plenty of room for improvement, investors seem increasingly focused on what comes next. The second-quarter earnings report in August should provide a clearer indication of whether the recent improvement in traffic trends continued and whether Sweetgreen is beginning to translate those gains into stronger financial performance.