Shake investors rattled, stock rolls over

Wall Street shook up Shake Shack after the highend hamburger and fries chain greased the exits Thursday for its original investors.

Shares in the chain — which has grown to 75 locations, 41 in the US — fell 4.8 percent, to $46.22, after the company said it would convert all 21 million Class B shares to Class A shares — a move that will allow founder Danny Meyer and investor Leonard Green to sell down their holdings to zero.

Meyer owns 5.1 percent of Shake Shack, and Green and his associates own 20 percent.

The Thursday selloff erased all the gains the company posted this year — but some on Wall Street say the selloff was overdone.

“Danny’s in it for the long haul,” said a source close to the restaurateur, who added that the fast food chain’s other large holders also seem content.

In addition to converting 21 million Class B shares to Class A shares, the 11yearold company is set to issue 5 million additional Class A shares.

Shake Shack went public on Jan. 30 at $21 per share — an initial price that swelled to a high of $96.75 in the second quarter. Its retreat on Thursday now has it just above the $45.90 closing price on its first day of trading.

Even at these prices, which translate into a sales multiple of 3.8, the stock of the $1.75 billion market cap company is hardly cheap.

Company plans call for a steady and aggressive expansion.