CAVA Crazy

The market certainly had a big appetite for CAVA stock, with the IPO priced well above the range at $22 and the shares opening at $42. The risk/reward from here is not good.

When we published our "first look," we put the fair value at ~$1.5B. That was based on a dispassionate view of the deal, which now has all the hype and passion of motherhood, nature, and helping people. See The First Bite of CAVA for more.

CAVA is a good company with a solid management team, but it is far from "the next Chipotle!". Some of the tailwinds they enjoyed during the last two years are about to become headwinds.

With ~114m shares out, the current $42 price gives it a market cap of $4.8B.

There are many good things today about the company, but the boosters and the current stock price represent them well. Better now to focus on some of the issues shareholders at these prices might want to consider.  

Easy Growth is Over

Within an excellent organic growth story is the astute acquisition of Zoe's Kitchen out of bankruptcy a few years ago. The conversion of these locations was responsible for the bulk of growth in 2021 and 2022. Going forward the dynamics will be different.