IPO Success Story: Cava’s stunning public debut could open floodgates to more IPOs

Cava’s stunning public debut could open floodgates to more IPOs

The venture capital community has been waiting for months for a bona fide IPO success story. And when it came, it wasn’t in the form of a leading-edge tech company but rather a chain of “fast-casual” restaurants that serve Mediterranean-style dishes like harissa honey chicken and tahini Caesar salad bowls.

Cava Group (symbol: CAVA) blew away expectations when its shares debuted on the New York Stock Exchange on June 15, doubling its initial IPO price during its first trading day. Cava’s phenomenal public debut, along with the recovery in public stock markets in recent weeks, is signaling to many on Wall Street and in the VC world that a year-long dry spell in the IPO market may be over.

A recent article on the CNBC website said that a successful IPO by Washington D.C.-based Cava would be particularly encouraging to restaurant companies considering going public. Panera Breads, Fogo Hospitality, owner of Brazilian-style steakhouse Fogo de Chão, and Korean barbecue chain Gen Restaurant Group are among the restaurant chains that have shown an interest in going public.

Meanwhile, other non-restaurant companies that have shown an interest in going public, such as Instacart, Databricks, and Navan, formerly known as TripActions, could be emboldened by success stories like Cava Group’s. And Rubrick, a cybersecurity firm backed by Microsoft, also has plans to launch an IPO, sources close to the company told Reuters.

Cava expressed its intent to go public in a February filing originally expecting to sell shares at between $17 to $19 but ended up pricing the IPO at $22 on Wednesday, June 14, a day ahead of trading on the New York Stock Exchange, according to The Wall Street Journal. But outsized demand caused the stock to open at $42 a share on its opening day and to close later that day at $43.78 nearly doubling that of the IPO price.

The company sold 14.4 million shares in the IPO, raising nearly $318 million based on the $22 IPO price.

As of market close on June 22, Cava was trading at $39.16 a share, still nearly double its IPO price, with a market value of over $8 billion. That’s a far cry from the company’s last known valuation as a private company of $1.4 billion, a figure based on an April 2021 Series F round which raised $212 million. At the time, Cava’s private shares were valued at $12.54.

About the Author

John Kimelman is a veteran journalist who has worked at Barron’s and CNBC covering such topics as investing and commercial banking. Mr. Kimelman has received compensation from Forge Global, Inc. for authoring this article. Read more from John.

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