Cava Stock Stuns – The Newest IPO 📈

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Cava Stock Stuns – The Newest IPO

Amidst a volatile economic environment, a new IPO defied all odds and conducted a newsworthy entrance into the public trading sphere of Wall Street. Founded 15 years ago, CAVA became a nationwide sensation as a Mediterranean fast-casual restaurant, rivaling the industry leader Chipotle. Although having a smaller market capitalization by nearly $50 billion, Cava Group, which owns both CAVA and Zoës Kitchen, has a per restaurant value of $18 million, higher than Chipotle’s roughly $17.6 million per restaurant valuation. Thursday morning, Cava Group made its public market debut, with its IPO starting on Wednesday at $22 per share and finishing at almost $44 a share, exactly a 99% daily increase. They sold a total of 14.4 million shares, raising $318 million in the process.

The broader impact of the IPO hoped to inspire several other restaurant chains to follow suit, especially after harsher IPO environments in the past couple of years. Within the fast-casual subgenre of the restaurant space, CAVA utilized the healthy, build-your-own model popularized by Chipotle to become competitive for market share in a relatively unsaturated new industry. Along with going public, CAVA released financial statements that showed recent revenue growth, with 2022 net sales at $564 million up nearly 12.8% from the year prior. Despite hefty losses in 2022, some analysts do believe CAVA’s position for profitability deems it reasonably attractive as a growth stock. With the proceeds made from its 14 million share IPO, Cava Group plans to expand corporate offices and restaurant presence. Nevertheless, the overnight success of the public offering has shown a clear path for other restaurants interested in going public such as Fogo De Chao, Panera Bread, Fat Brands, and more.

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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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