Hot! Shake Shack IPO priced at $21, well above expectations

Initially expected at $14-16 per share, offering priced up significantly this evening, and number of shares increased from 5M to 5.75M.

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The original Shake Shack located in Madison Square Park.
The original Shake Shack located in Madison Square Park. (Image via Wikipedia)

WASHINGTON, January 29, 2015 – Several reliable sources reported Thursday evening that fashionable high-end fast-food chain Shake Shack has just priced shares of its hot IPO at $21 per share.

The initial price range for the newly issued stock was indicated at $14-16 per share, but the expected range was moved up earlier this week to $17-19 per share.

Demand for the shares, however, clearly outstripped supply and underwriters have formally priced the offering up another $2 from the top of its previously expected range. In addition, the underwriters boosted the number of shares on the offer from 5 million to 5.75 million Class A shares.

Generally, when an issue is priced up in this manner, traders can expect a substantial pop in its price once the shares formally open for trading later the morning following pricing. Expectations are that Shake Shack shares (new symbol: SHAK) will open for trading somewhere between 10:30 and 11:30 a.m. EST, once initial buy and sell orders are paired.


From time to time, however, aggressive pricing by the underwriters leads to failure, with the most notorious recent example being Facebook’s (FB) debacle of an opening on NASDAQ. Subsequent to the initial pop, FB sank like a rock over the next month and even those who got in on the issue suffered significant early losses.

Friday’s action in the new SHAK shares should give a fair indication as to where the shares will be heading over the next calendar quarter.

 

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