The Dutch Bros Inc. stock price was in a bullish trend since the start of 2023 making a high at $41.44 after which the bears drove the price to $28 level. Price found support at $28 and started to rise, breaking above the primary resistance at $31.74. The break and close above the resistance provided confirmation for the upward move.
Bros stock recently crossed the 20 day EMA indicating a bullish momentum in price. If the bullish momentum continues, the price can be expected to reach $35 level and further could retest the $41 level.
Dutch Bros released its financials for the 4th quarter of the fiscal year 2022 on february 22, 2023. The report attracted bears. The revenue grew by 48%, but gross profit margin fell from 31% to 24%. According to the base case scenario for valuation, intrinsic value of the stock is $17.39 compared to the current price, Dutch Bros Inc. is overvalued by 46%. A major concern for Dutch Bros is the excessive expansion which may have led to slow down in net income.
Adverse weather conditions in California is likely to impact the quarter 1 result of Dutch Bros as 19% of the units reside in the state of california. The price came down by 1.36% to $31.60 on April 4. The profitability of Dutch Bros has took a hit as the company showed negative free cash flow, negative operating income, negative net income.
Technical Analysis of Dutch Bros Stock:
The RSI curve is moving upwards as price gains bullish momentum and is currently at 53.30. The price established support at $28.55 level and is likely to retest the $35 level.
On a 4-hour basis, the RSI curve crossed the 60 mark after price broke the resistance level of $31. The RSI curve is headed towards the overbought zone and might produce a pullback.
The price crossed the 20 day SMA on the bollinger band on a daily basis indicating bullish pressure in the market. On a 4-hour basis, the price reached the upper band of bollinger band. There is a higher probability for the price to stay on the upper band as the bullish momentum on the stock is strong.
The +DI has crossed -DI in upward, with ADX of 24.05 on a daily basis indicating strong bullish momentum. The ADX is increasing after it broke the resistance on the 1-day chart.
On a 4 hour basis, the +DI started to dip.
Conclusion
The market structure as well as the price action is strongly bullish for Dutch Bros Inc. Future prospects for the stock includes a highly likely bullish rally as it has been expanding.
Technical levels
Major support: $28.50
Major resistance: $36
