Shake Shack Pops 118%
Shake Shack (SHAK), a recently IPO’d burger restaurant, popped 118% on its first day of trading on January 30, 2015. The stock opened at $47, reaching the day’s high of $52.50 and dropping to the day’s low of $45.12, finally closing at $45.90. The IPO, or initial public offering, was priced at $21 with the company offering 5 million shares, helping the company raise $105 million.
The chart above shows revenues in 2013 for Shake Shack and its closest peers.
Initially, the IPO was priced between $14 and $16. The company later hiked the IPO to $17 and $19 and it finally ended at $21. A company that’s going public raises its offer price if it anticipates strong demand for its shares.
Shake Shack calls itself a fine-casual restaurant, which is very similar to a fast-casual restaurant concept such as The Habit Restaurants (HABT). Other fast-casual restaurants include Chipotle Mexican Grill (CMG), Potbelly (PBPB), and Noodles & Co. (NDLS). These stocks and the broader restaurant industry are sensitive to the economy. They’re included in exchange-traded funds (or ETFs) like the Consumer Discretionary SPDR fund (XLY). Restaurants account for up to 4% of XLY’s holdings.