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Author: Alan LittleDate: 2022-04-04

Toast, Inc. (TOST) up 4.74% as restaurant tech grows

Toast, Inc. (TOST) posted a strong close on Friday 1st April as it finished 4.74% above its open, perhaps signalling that the worst is behind it.

Although it is still quite a way off its all-time high, Toast, Inc. (TOST) nevertheless had a positive close last Friday as it finished the week on a +4.74% high.

While its stock price has been experiencing some notably sideways growth for a few consecutive months now, this might be a positive signal of things to come.

Having initially had a much-anticipated IPO in September 2021, TOST, like many other tech stocks, experienced a sharp dip in the share price, which provided a jolt to investors.

However, the +4.7% jump on 1st April was no April Fools’, with a number of industry analysts feeling much more positively about Toast’s fate.

Some of this optimism is down to Toast’s fundamentals.

Although it is relatively small by tech company standards, Toast has plenty of spare cash and short-term investments, little debt, and a business model that is designed to deliver steady revenue.

While Toast technically sells point-of-service and mobile ordering hardware, this is not its main source of revenue.

In fact, it sells the hardware below cost and generates revenue through recurring software charges and digital payments.

This side of the business has been performing incredibly well over the last year, with sales in Q4 2021 up 6% from Q4 2019.

Additionally, its subscriptions were up 67%, with company heads predicting further growth in the 30% range in 2022.

However, this path towards further growth will not be straightforward, and while some analysts have predicted that software companies such as TOST will experience increased demand in the coming months and years, the competition is already getting fierce.

With other competitors such as Olo (OLO) and Block (SQ) already vying for market share, this will by no means be an easy ride for TOST.

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