Shake Shack Inc., the New York-based burger chain founded by restaurateur Danny Meyer, fell the most since its January trading debut after pricing a secondary stock offering at $60 a share, below Wednesday’s close.
Shake Shack slid 16 percent to $54.49 at the close in New York, the biggest one-day drop since the shares started trading. The company announced the $60 stock offering price in a statement after regular trading hours on Wednesday. The burger chain said the offering of 4 million shares by some of its stockholders is expected to close on Aug. 18.
Shares of Shake Shack, known for upscale fast food, more than doubled after debuting at $21 in January but have lost ground in recent months. Morgan Stanley recently said the shares were overvalued because of “brand-related” euphoria.
The stock’s price has still gained 160 percent since the IPO, and the secondary offering will allow the company’s early investors to profit from that surge. The underwriters also have the option to purchase an additional 600,000 shares at the public offering price. Shake Shack’s principal investors include Meyer and private equity firm Leonard Green & Partners.