Why Are Shake Shack (SHAK) Shares Soaring Today
What Happened:
Shares of fast-food chain Shake Shack (NYSE:SHAK) jumped 6.8% in the morning session after the announcement that Randy Garutti, the CEO of the company, will retire in 2024 upon the selection of his successor. The Board of Directors, spearheaded by Korn Ferry, has commenced an external search for a suitable replacement. Additionally, the company reaffirmed its Q4 and FY'23 guidance, indicating that the leadership transition is not expected to have a significant short-term impact, reassuring investors.
Cowen analyst Andrew Charles expressed optimism about the change, noting, "As is the natural evolution with businesses, we believe this allows Shake Shack the opportunity to hire an executive with a background from a more scaled (ideally restaurant) growth organization. In our view, this is facilitated by Directors Chuck Chapman and Jeff Lawrence's experiences at Panera and Domino's, respectively, who will be a part of the search committee."
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What is the market telling us:
Shake Shack's shares are quite volatile and over the last year have had 14 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
Shake Shack is up 59.5% since the beginning of the year, but at $66.51 per share it is still trading 16.8% below its 52-week high of $79.91 from July 2023. Investors who bought $1,000 worth of Shake Shack's shares 5 years ago would now be looking at an investment worth $1,423.
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