IPO Update: SHAK & ONCE

Shake Shack (SHAK) and Spark Therapeutics (ONCE) both experienced flashy IPOs on Friday 1/30/15. Both of them more than doubled, with SHAK finishing the day up 119% and ONCE finishing up 117%. The last time 2 or more IPOs doubled on the same day was 7/28/00, the tail end of the dotcom/telecom bubble, when Avici Systems (AVCI), Corvis (CORV), Illumina (ILMN), and Webex Communications (WEBX) all doubled.

Because both IPOs ran up so much on their debuts, I believe they will pull back first before climbing higher. Given that SHAK has the potential to be a “cult stock”, similar to GPRO, MBLY, and NFLX, I believe it will eventually continue higher in the coming weeks. Though SHAK is only a restaurant chain, it is experiencing hyper-growth and plans to expand by opening more restaurant locations with the capital raised from their IPO. (See my analysis of the SHAK S-1 for more information on the company’s financials).

shakchart.2.2.15

From my SHAK chart (posted above), I am predicting that SHAK will revisit $42 in the coming days. Even if it bounces off the $42 line, I would still wait to buy the stock until it clears its high on Friday, which was $52. Once it breaks this level, I think it can run up to $70+, much like MBLY and GPRO did following their IPOs this past summer.

Spark Therapeutics (ONCE) is similar to Ultragenyx (RARE), which doubled in its debut on 1/31/14, and is currently trading above its first day closing price. Given the strength of their sector, I think ONCE will breakout once it breaks its $48.75 intraday high from Friday, but I would hold off buying it until then, as it still has room to go down until its reversal occurs. (My chart of ONCE posted below).

oncechart.2.2.15

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