I promise you, whenever Morgan Stanley decides to bring The Shake Shack public, I will put 20% of my net worth in it. I will buy the stock every month, after I earn my wage, and dollar cost average into the burger chain until they have 350 stores in the Unites Steaks. At the present, they own a little more than 50.
In the after hours, YELP is down a hard 10 after giving tepid guidance. This is a situation that should be monitored and action should be purposeful, for YELP, ultimately, trades much higher.
But let’s discuss the matter of valuation, shall we?
The stock is trading 17x sales, a tremendous burden for any CEO. Given the growth rate, YELP will trade 11-13x sales next year, providing the stock remains at these levels. There is a strong case to be made for 15x sales, but not 20x. I own a small position and will use any sizable decline to add to it.
The market closed at the lows and a terrorist event took place in Canada today. I’d be shocked if we didn’t trade lower tomorrow.
I sold out of my CYBR and set the proceeds to cash.
My best guess, looking at historical routs and subsequent bounces, we trade lower until Thursday of next week, then bounce the hardest.
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