Toast Inc. shares plummeted more than 40% from their summer peak. Market concerns regarding artificial intelligence’s impact on the software-as-a-service (SaaS) sector drove the decline.
The company nearly doubled its free cash flow to $608 million last year. Toast currently serves approximately 20% of small- and mid-market restaurants in the United States.
Investors fear AI advancements will allow competitors and large restaurant chains to replicate Toast's software. Enterprise clients may avoid Toast’s proprietary ecosystem to develop internal systems instead.
Toast launched Toast IQ, an AI assistant designed for data-driven decision-making. Current market sentiment prioritizes long-term AI threats over the company's solid core business and recent innovations.