Sweetgreen Stock News: IPO has SG shareholders seeing green

Let the complaining about expensive salads commence. Fourteen-year-old salad chain Sweetgreen went public on Thursday to great fanfare with the new stock, ticker symbol SG, trading up 76.8% to close at $49.50. It was an initial public offering success by any standard in a month that has already seen plenty – Rivan (RIVN), Sono Group (SEV) and Expensify (EXFY) to name a few. SG stock is down 2.6% to $48.20 in Friday's premarket.

Sweetgreen (SG) Stock News: $364 million raised for expansion

The salad restaurant chain was founded in 2007 by three recent Georgetown University graduates – Nicolas Jammet, Nathaniel Ru and Jonathan Neman. A decade and a half later, Sweetgreen boasts more than 140 locations in 12 states throughout the US. As a vegetarian haunt, it is definitely not Chopt liver.

Initially, the salad chain said it would be selling 12.5 million shares for between $23 and $25 a share. As has become a common strategy with initial public offerings (IPOs) this year, however, the day before the IPO the company raised these figures to 13 million shares at $28 per share. This raised $364 million for the company, most of which will be dedicated to expansion.

"The current plans are to double our footprint in the next three to fives years and over time create a massive global, iconic brand that changes the way people eat," said CEO Jonathan Neman in an interview with Bloomberg TV.

The lead book-running managers for the IPO were Goldman Sachs and J.P. Morgan. Allen & Company, Morgan Stanley, Citigroup Global Markets, Cowen & Co., Oppenheimer, RBC Capital Markets, William Blair, Amerivet Securities and Blaylock Van also pitched in.

Sweetgreen (SG) Stock Analysis: a quick run to $50

SG stock opened near the end of the session at $52 on the NYSE, more than 85% above the IPO price. SG price ran as high as $56.20 before early holders started cashing in their chips. SG stock hit a session low of $46.01 but rebounded to close at $49.50.

The current market cap of SG is $5.26 billion, but when fully diluted by employee stock options this figure would be closer to $6 billion, give or take. With trailing twelve month revenue of $303 million, this gives Sweetgreen a price/sales ratio just under 20. Sweetgreen lost $141 million, or $8.80 a share, in 2020, but the company attributes much of this loss to the pandemic.

While there is not much to deduce from a stock that has only traded a bit over two hours in its public existence, Thursday's low of $46.01 appears to be the most important support level. If SG prices crosses this level, then Sweetgreen stock could take a greater stumble. Addtionally, there appears to be some support around $49. Three times during the session when SG stock approached here, shares were bought up.

Bulls looking to get long on the other hand should focus on $52.88. If SG shares can makes their way above this level, it will be a sure sign that buyers are looking to push SG to a new high.

SG 1-day chart