Shake Shack Inc. plunged for the second straight day after investors scrutinized the burger chain’s valuation and one of the stock’s high-profile fans, CNBC’s Jim Cramer, recommended selling it.
The shares declined 14 percent to $73.69 at the close in New York. It was the biggest one-day drop since Shake Shack started trading in January and followed a 7.6 percent tumble on Tuesday.
Shake Shack, a New York-based burger chain, had seen its stock rise more than fourfold since its initial public offering. That’s raised questions about whether a company with fewer than 70 locations can justify a valuation of about $3 billion.
As of April 30, almost 43 percent of the company’s shares were sold short, meaning traders are betting they will go down, according to New York Stock Exchange data. Cramer, the host of CNBC’s “Mad Money,” also cited short sellers descending on the stock when he advised getting out of it on Tuesday.