Shake Shack (SHAK)

[cintrix]

The call of the day

Great burgers, sure, but does that mean investors should be getting in on new shares of the company born in a park? Uncertainty reins across Twitter over the Shake Shack IPO. There's lots of caution, including a column in Seeking Alpha from a research analyst who goes by the name of IPO Candy. It looks back at some similar IPOs for insight. Potbelly (PBPB) shares priced above the target range at $14 in October 2013, shot up to $30 and then bottomed out at $12. Today, PotBelly trades around $14 per share. Then there's Chipotle (CMG), which went public in 2006 at $22 and doubled its IPO price. Today it trades at $714.53, alongside explosive growth. IPO Candy says Shake Shack may not be the Chipotle that investors are hoping for, partly because ample competition in the burger sector may limit growth. Then there's the fact that the food is a "calorie bomb," says IPO Candy.

"A double burger, fries and a shake puts you over 2,000. We won't even go into adding a glass of wine or a beer. Most people enjoy "comfort food", but there's also a trend toward healthier eating and SHAK ain't it," says the researcher.

Bottom line, this deal is multiple times oversubscribed, which means fingers-very-burned hot. IPO Candy crunches the numbers and concludes this: At $16 or lower it's a decent name to own, but higher than that, wait or look at other less-hyped names.
http://news.morningstar.com/all/market-watch/TDJNMW20150130226/update-will-equity-vigilantes-push-this-market-south.aspx