As the popular fast-casual Mediterranean chain Cava prepares for its initial public offering (IPO) this week, CNBC’s Jim Cramer has advised investors to tread carefully. While he anticipates a strong IPO, he warns against potential pitfalls if “Cava comes out of the gateway too hot,” CNBC reports.
Cramer’s Advice: Cramer recommends holding off on investing in Cava unless one can get a piece of the actual IPO. He also urges investors to use limit orders, not market orders, to protect themselves.
Cava’s Valuation: Cava raised its valuation on Monday from $2.12 billion to $2.23 billion, with shares priced between about $17 and $19 apiece. Cramer expects underwriters to underprice Cava shares initially to engineer a “nice first-day pop.”
Comparisons and Warnings: Despite Cava’s nearly 13% revenue growth last year and a 28.4% increase in first-quarter same-store sales, Cramer warns that it’s difficult to evaluate the company as it is not yet profitable. He draws comparisons with Sweetgreen and Chipotle, cautioning investors about the unpredictable nature of the IPO market.
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