Papa John's stock has plummeted to a 14-year low. Why are investors selling it off?

Shares of Papa John's International, which operates the pizza chain of the same name, plummeted by more than 17% on August 6—hitting their lowest level since mid-2012. The company reported a decline in quarterly revenue, lowered its forecast for 2026, suspended dividend payments, and scrapped plans to sell the business.

Shares of Papa John's, which has been struggling for several years, fell more than 17% on the Nasdaq on August 6, to $24.6. This is the lowest level since June 2012.

The company reported that its global revenue in the second quarter of 2026 fell by nearly 9% year-over-year, to $482.4 million. Comparable sales in North America fell by 8.3%, while Wall Street had expected a 7% decline, according to Bloomberg.

The reason for this trend is “weakening consumer demand, a decline in order volumes, and excessive advertising activity in the market,” said CEO Todd Penegor, whose remarks are quoted in the press release.

As a result, Papa John's has revised its forecast for the full year 2026 downward: the pizza chain now expects its comparable sales in the U.S. to decline by 6–8%, whereas it had previously forecast a decline of 2–4%.

"The transformation is taking longer than the company had planned," Penegor acknowledged. To speed it up, Papa John's plans to invest more in attracting new customers and improving restaurant efficiency. To that end, the board of directors has decided to suspend quarterly dividend payments, according to a press release.

But the main source of disappointment for investors was not that at all, according to Rich Smith, a contributing analyst at The Motley Fool. Since 2025, the Qatari investment fund Irth Capital Management has been considering Papa John’s as a potential acquisition target, and investors were hoping to receive a healthy premium if the deal went through. On August 6, the pizza chain’s management dashed those hopes, noting that Papa John’s had decided to remain independent and try to turn the business around on its own, Smith writes.

In mid-July, Bank of America downgraded its rating on Papa John's stock and advised investors to sell it. One of the reasons for the rating revision was Ravi Tanavalu's departure as chief financial officer of the pizza chain on June 30.

“We believe it is unlikely that he would have stepped down after less than three years if he believed that drastic changes for the better were inevitable,” the analysts explained. They believe that due to “disruptions associated with a leadership transition, especially at a time when Papa John’s is attempting to restructure,” it will be more difficult for the company to forecast its financial results.

Wall Street, on the whole, is taking a wait-and-see approach to Papa John's stock: the stock has ten "hold" ratings, six "buy" ratings, and one "sell" rating. The average target price is $37, which is 50% higher than the most recent closing price.

Papa John's troubles began in 2017, when its founder, John Schnatter, found himself at the center of a racial scandal: during a conference call, he used a word that is offensive to African Americans. The company’s legal battles with Schnatter lasted about two years, after which he stepped down from all executive positions. Around the same time, in 2019, activist investor Starboard Value acquired a stake in Papa John’s, which helped improve the company’s financial situation.

But the challenges didn’t end there. Following the pizza delivery boom seen during the coronavirus pandemic, pizza restaurant sales began to decline; as of January, they were underperforming the fast-food market as a whole. This situation has led to a decline in Papa John’s comparable sales, restaurant closures in the U.S., a reduction in the menu, and employee layoffs. All of this is unfolding against the backdrop of reports that the Qatari investment fund Irth Capital is interested in acquiring Papa John’s. Between 2025 and 2026, Irth Capital made two offers to buy the company, neither of which was accepted.