Home Stocks Shake Shack Inc surges in its trading debut

Shake Shack Inc surges in its trading debut

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Despite an overall gloomy world economy that increasingly is turning to quantitative easing programs and a disappointing US GDP number this morning. In the fourth quarter, US GDP shank to 2.6%, and further prompted worries about overall health of the economy.  Additionally, it is extremely likely that the falling economic growth will further complicate the Federal Reserve’s rate hike plans.  Meanwhile, consumer sentiment remains extremely high, as oil’s continued fall to multiyear levels is saving consumers lots of money at the pump, giving them excess cash for spending in other areas.  While this low oil is great for consumers, it is likely a major reason why the US economy slipped during the fourth quarter, when oil prices really began to dive.  While it certainly is an issue, traders were distracted this morning due to a much anticipated IPO: Shake Shack.

shake shack

Shake Shack rallies 130% from opening bell

Traders were excited that Shake Shack’s IPO day had finally arrived.  The much anticipated burger and shake chain set its initial public offering at $21 a share, but as trading started, the stock began to surge.  As of this writing, Shake Shack, which trades under symbol “SHAK”, shares currently trade at $48.18 or up 130% on the day.  This is a massive rally that over doubled its initial offering price and raised even more than the company thought.  Current volume, as of this writing, shows that 8.7 million shares have been traded in a little over an hour since the markets opened.  Just earlier this week, Shake Shack executives and their IPO banks said that the opening price would be set between $14 and $16 a share for the burger chain, but leading up to the IPO last night, the new publicly traded company sold 5 million shares at $21 a share.  At its initial price of $21 a share, the company raised $105 million in the public offering and gave the company a market cap of $746 million.  Obviously, those numbers are much higher now after the stock has staged its massive rally.

History of Shake Shack, what makes it special?

Despite a very successful IPO for the burger and shake chain, it is important to note what makes the company special and why investors are trying to grab shares hand over fist.  The chain is described as a “modern day roadside burger stand”.  Aside from burgers, fries, and shakes, the company offers hot dogs, custard, beer, wine, etc.  It is important to note that Shake Shack prides itself in using antibiotic and hormone free beef for the making of its burgers, making it appeal as a much more natural option than fast food burger shops.  The company’s headquarters are in New York, New York.  Locations include: New York, Pennsylvania, Georgia, Florida, Massachusetts, Connecticut, Las Vegas, New Jersey, and even international such as Middle East, UK, Turkey and Russia, to name a few.

Overall, Shake Shack has had a tremendous IPO day and with hundreds of millions of dollars raised today, investors will be looking for good corporate leadership to expand its brand and continue to bring in higher profitability levels.  For now, traders and executives celebrate the successful IPO.

Disclosure: None

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