Shake Shack, the better-burger phenomenon, debuted on the New York Stock Exchange on Friday morning under the ticker “SHAK.” Investors are gobbling it up.
After Danny Meyer’s burger joint sold 5 million shares at $21 apiece late Thursday, the stock opened at $47 and climbed as high as $50 in its inaugural hour of trading. That’s an increase of roughly 130 percent from the IPO price.
Shake Shack raised $105 million from its offering on Thursday for a valuation of a little more than $745 million. Based on its current share price, the chain now has a market cap of about $1.71 billion.
That Wall Street has such a voracious appetite for Shake Shack stock is yet another indication that fast-casual dining—a higher quality version of fast-food—is taking off in the U.S. Other beneficiaries of that movement include Panera, Five Guys, and, of course, Chipotle. In May of last year, restaurant industry research firm Technomic found that growth in fast-casual dining was rapidly outpacing that of every other dining segment. Sales of fast causal rose 11 percent between 2013 and 2014 alone.
When Shake Shack filed for its IPO in late December, it said revenues had roughly quadrupled over the past three years from $19.5 million to $82.5 million, and profits had increased by a factor of 27, from $0.2 million to $5.4 million. Investors and analysts have said that the main allure of Shake Shack’s stock is its growth prospects—with gas prices expected to stay low in 2015, consumers should have more discretionary income to spend dining on burgers, fries, and milkshakes.
At least, that’s what Wall Street is hoping. That, or bankers just really like burgers.