Skeptics on the Right Side of Shake Shack Inc (SHAK)

Shake Shack Inc (NYSE:SHAK) is plunging, after the company unveiled a lackluster secondary offering

by Karee Venema

Published on Aug 13, 2015 at 2:07 PM

Unlike Tesla Motors Inc (NASDAQ:TSLA), Shake Shack Inc (NYSE:SHAK) is tumbling after the company unveiled a secondary offering. Specifically, the fast-food firm last night said it will sell 4 million shares at $60 apiece -- a discount to last night's close at $64.79. As such, traders have been hitting the bricks, with SHAK off 10.3% at last check to linger near $58.14.

Longer term, SHAK has performed much better than some other stocks in Wall Street's freshman class -- like Etsy Inc (NASDAQ:ETSY) and GoDaddy Inc. (NYSE:GDDY), for example -- up 24% since going public in late January. However, since hitting a post-IPO peak of $96.75 in late May, the shares have shed 40%.

On the sentiment front, not much is expected from the Wall Street newcomer -- even in the wake of this week's stellar quarterly earnings report. Among the six analysts covering the shares, each one maintains a "hold" or worse recommendation on the stock. Meanwhile, the average 12-month price target of $45.20 stands at a discount to current trading levels, and resides in territory not charted since mid-March.

This skepticism is seen elsewhere, as well. In fact, short interest jumped 5.6% in the most recent reporting period, and now accounts for 41.3% of Shake Shack Inc's (NYSE:SHAK) available float. In fact, the 2.4 million SHAK shares sold short represent the loftiest amount of bearish bets placed against the stock in its short life span.

A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earning announcements before it's too late!


 
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


Look Who's Going Bankrupt Next in America
Porter Stansberry is making a concerning prediction.
Apparel Name Boosted By Earnings Beat
Three analysts have moved their price targets down to $60
Black & Decker Withdraws 2020 Guidance, Cuts Non-Essential Staff
Black & Decker said it would reduce any non-essential staff and decided to withdraw its 2020 forecast
Look Who's Going Bankrupt Next in America
Porter Stansberry is making a concerning prediction.