Cava (CAVA) on Thursday made its public debut on the New York Stock Exchange, and it looks like Wall Street investors want, at least initially, to take a bite.
Shares of the Mediterranean fast-casual restaurant chain priced in at $42, listing on the New York Stock Exchanging under the ticker “CAVA.” That’s higher than the company priced in on Wednesday evening of $22 per share, which valued the company at $2.5 billion.
On Thursday, the company sold 111,385,928 shares, valuing the restaurant chain at roughly $4.68 billion.
CAVA initially sought a common stock price offering for between $17 and $19 per share, which valued CAVA as a roughly $2.1 billion business; it then raised that range to $19 to $20 last Monday.
Cava’s IPO is the sixth largest on a US exchange so far this year. The largest? On May 3 J&J spinoff Kenvue (KVUE), made its public debut at $4.37 billion.
Cava said it expects to use the proceeds to open new restaurants and for general corporate purposes such as the payback of a loan used to finance its second production facility in Verona, Virginia, which broke ground in 2022.
As of April 16, there are 263 Cava restaurants. Since it acquired Mediterranean fast-casual chain Zoes Kitchen for $300 million back in August 2018, it has successfully converted 145 Zoes Kitchen locations into Cava restaurants. Throughout the rest of 2023, it plans to open between 34 to 44 new Cava locations and open another eight converted Zoes (the remainder of the locations). By 2032, the company said it plans to operate 1,000 locations in the US.
Cava is the first food chain to go public since Sweetgreen (SG) made its debut in 2021. Shares of the salad chain surged in its public debut to $52 per share from its offering price of $28 per share. The chain, however, is now trading well below its offering price, largely because it isn’t yet profitable.
On Thursday. when CAVA made its debut, shares of Sweetgreen got a bit of a boost in early market trading to more than $11 per share, after falling to roughly $6 earlier this year.
If the CAVA IPO is successful, it could have implications for other chains: Panera Brands, which owns Caribou Coffee, Panera Bread and Einstein Bros Bagels, Korean barbecue concept GEN Restaurant Group, and Brazilian Steakhouse Fogo de Chão are expected to go public at some point.
There is some hesitation on the street though.
David Trainer of New Constructs said the IPO is overvalued, while Chris Versace, Tematica Research Chief Investment Officer, told Yahoo Finance, “As an investor, I would just sit kind of sit back and wait and kind of see what develops. I would not be chasing this in the near term.”
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Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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