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Share Name | Share Symbol | Market | Type |
---|---|---|---|
JP Morgan Chase and Co | NYSE:JPM | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.2101 | -0.11% | 193.0699 | 4,564 | 13:16:09 |
By Corrie Driebusch
Thanks to hearty investor appetite, Shake Shack Inc.'s initial public offering priced well above expectations, netting the burger chain a valuation of $745.5 million.
The restaurant chain, which calls itself a "modern day roadside burger stand," priced its initial public offering at $21 apiece late Thursday.
The deal raised $105 million by selling five million shares of the chain, which catapulted onto the dining scene 14 years ago as a hot-dog cart in a Manhattan park. That total doesn't count a so-called overallotment option, which gives underwriters the opportunity to sell additional shares under certain circumstances.
There was strong demand for Shake Shack shares, according to money managers. Reflecting that demand, the company earlier this week increased its price range to $17 to $19 a share from its original range of $14 to $16.
Investors and analysts said the appeal of Shake Shack's shares lies mainly in the chain's growth prospects. Shares of so-called fast-casual restaurants have been gobbled up by investors in recent IPOs, in part on a bet that consumers will spend more money eating out as falling gasoline prices leave more money in their pockets.
Among the most recent fast-casual restaurants to go public, burger chain Habit Restaurants Inc. priced above expectations at $18 a share and then more than doubled in its first day of trading. Habit's shares have fallen back but remain up 83% from the IPO price.
Shake Shack opened in 2004 and now operates 63 restaurants, 31 of them company-operated, including seven in Manhattan. There are also five domestic licensed Shake Shacks in the U.S. The rest are internationally licensed, including 20 in the Middle East, according to its prospectus.
Although its footprint is fairly small, its growth plans are big.
It plans to open at least 10 new domestic company-operated restaurants each year, beginning in fiscal 2015, for the foreseeable future, and expects to grow to at least 450 domestic Shake Shacks.
Troy Huff, a senior research analyst who covers consumer sectors for Nuveen Asset Management's small cap core and growth teams, said he was considering the Shake Shack IPO, though he acknowledged the growth plans can be v
iewed as lofty, since every Shake Shack has a unique design and requires prime real estate.
Investors, though, "understand this is a very young company," Mr. Huff said.
Instead, the focus of many fund managers is on the average sales per Shake Shack, the margin profiles of the different locations and the development pipeline.
Shake Shack is set to start trading on the New York Stock Exchange on Friday under the symbol "SHAK." The deal is being led by J.P. Morgan Chase & Co. and Morgan Stanley.
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