Shake Shack is expecting to have an IPO of $14 to $16 a share. The company, based in New York, was founded out of a hot dog stand and has since been valued at up to $568 million. The company is one of many casual chains expected to have a successful IPO.
Founded in 2001 by Daniel Meyer, Shake Shack is best known for their Shakeburgers and unique lineup of food offerings.
The company has experienced major growth in recent years expanding to 36 outlets in the United States alone. The company also has 27 international outlets in major locations including Dubai and London.
Shake Shack has announced that it will be offering 5 million shares. Class A shares that will be offloaded are expected to help the company raise $80 million. After the IPO goes public, the company has stated that Class A shareholders will account for 14.1% of the company’s voting power.
Shake Shack has had a year of ups and downs. Revenue increases of 41% are promising, but the company’s net income fell by 20 percent. These figures account for the first 39 weeks of the year. Revenue rose to nearly $84 million during this time period.
The company’s IP is currently being underwritten by JP Morgan Chase.
Major shareholders of the company are listed as Meyer’s Union Square Hospitality and Leonard Green & Partners. The Select Equity Group is also a major shareholder.
Investors are likely going to short the IPO as prices are sure to drop in the initial trading day.
Rules and regulations against these practices do exist, but it’s still possible to short sell the day of the IPO.
Shake Shack may be a big hit, but until investors are able to see how the company performs, this may be a risky investment for the smaller trader.