Why Shake Shack Stock Was Heating Up Today

[ad_1]

What happened

Shares of Shake Shack (NYSE:SHAK) were gaining today in what appeared to be a delayed reaction to news that the fast-casual burger chain was expanding in China.

The restaurant stock closed 9.1% higher on Thursday.

A Shake Shack burger in an employee's hand.

Image source: Shake Shack.

So what

On Tuesday, Shake Shack said it was expanding its partnership with its Chinese licensee Maxim’s Caterers by adding 10 Shacks in new territories in China by 2031. The company is now committed with Maxim’s to have 79 restaurants operating in that country by 2031. Currently, it has 16 Shacks open in China, up from just seven at the beginning of the year.

Michael Kark, Shake Shack’s chief global licensing officer, said: “We are humbled by the enthusiasm our fans have shown us in China and see this extension to Chengdu and beyond as a natural next step for Shake Shack. China is incredibly fast paced, dynamic and remains our fastest growing international market.”

Now what

Shake Shack shares gained modestly on Tuesday and Wednesday on the news, and it was unclear why the stock shot higher today, since there were no other company-specific updates. What is clear is that Shake Shack has seen huge demand in Asia with long lines common at store openings, and China represents what could be its biggest market and one that has taken enthusiastically to American fast food.

READ:  3 Major Takeaways From Wish's Latest Earnings

Growing its China base to 79 locations over the next 10 years isn’t enough alone to move the needle on the stock, but the key part is that the company is expanding to several new territories over that time, starting with Chengdu next year. That will allow it to more deeply penetrate the world’s most populous nation, and if the openings are successful, investors should expect the expansion to grow well beyond 79 locations.

 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.



[ad_2]
View more information: https://www.fool.com/investing/2021/06/24/why-shake-shack-stock-was-heating-up-today/

Xem thêm bài viết thuộc chuyên mục: investing

Related Articles

Leave a Reply

Back to top button