Friday, 8 May 2015
What's Behind The Recent Sell-off In Shake Shack's Shares?
Shack Shack’s (NYSE:SHAK) shares sold off close to 30% on Thursday and early Friday morning from all-time highs reached earlier in the week. That’s the bad news for Shake Shack investors. The good news is that by early Friday afternoon, shares rebounded nicely. Does it mean that the sell-off is over? We cannot say for sure. What we can say is that the sell-off comes at a time when the overall market has been rallying. And there are no corporate developments to explain it. Shake Shack was making burgers and fries the same way on Friday as it was at the beginning theweek, when the stock was racing to new highs. That means that the sell-off could be just profit taking after the phenomenal rally of the stock since it went public— trading at 700-times next year’s earnings. Still, profit taking cannot explain such a sizable decline. Besides, the stock continues to trade above its 50-day and 200-day moving averages. One piece of news that might have spooked Shake Shack investors was a string of disappointing financial reports by Noodle & Company’s (N&C)—including one this week— which crashed the stock of that once popular company. Chipotle’s McDonald’s, Noodle & Company And Shake Shack’s Key Metrics