Cava Group Stock IPO: CAVA gains 3% in Friday premarket after 99% debut rally

Cava Group (CAVA) stock nearly doubled on Thursday in what many see as the first sign that the IPO market is returning to its former self after a lackluster 2022. The “fast-casual Mediterranean” restaurant chain was initially priced between $17 and $19, but the bookrunners raised the price to $22 ahead of Thursday’s IPO. The stock sailed all the way to $47.89 from there before closing up 99% at $43.78.

Cava stock news: IPO season returns with thunder

The IPO schedule has been remarkably quiet over the past 18 months as appetite for new issuances sank with the overall market prices. The few companies that have gone public have mostly been small, interesting micro caps.

Cava is the first high-profile IPO since 2021, when every week seemed to have a SPAC (special purpose acquisition company) merger or IPO lead the headlines. The heavy demand for CAVA shares seen on Thursday means that investment banks will likely get to work in order to bring the next batch of private companies to public markets.

Halfway through 2023, there have only been about 45 IPOs on Wall Street, which have raised a collective $7.6 billion. This is already nearly overtaking the value of IPOs in all of 2022 but is not even close to 2021’s exuberant IPO market. In that year Wall Street pushed out nearly 400 IPOs that raised more than $142 billion in capital.

Cava offered 14.44 million shares in its debut, so at $22 the company should have raised about $317.7 million. Executives at the restaurant chain, which was founded in 2011 by three Maryland natives, said the influx of funding would allow the firm to open a number of new locations. The company currently has 263 restaurants in operation, according to its S1 filed with the Securities & Exchange Commission (SEC) ahead of the IPO.

The chatter among the analyst class thus far has concerned whether Cava will become a star growth stock like Chipotle (CMG) or another unprofitable dud like SweetGreen (SG). Cava had a net loss of $59 million in fiscal 2022 on revenue of $564 million.

Now valued at $4.9 billion following its first session of trading, Cava is already valued above more mature restaurant brands like Shake Shack (SHAK), Jack in the Box (JACK) or Wendy’s (WEN). 

Cava stock forecast

There is nothing to expect on Friday, but traders will watch to see if bulls can push CAVA stock to a new high above $47.89. CAVA stock gained 3.1% in Friday’s premarket to trade at $45.14.

CAVA 30-minute chart