Can Guzman y Gomez become the next McDonald's?
This week, the Australian Stock Exchange — the local exchange traditionally dominated by banks and miners — got spicy.
Fast food chain Guzman y Gomez Mexican Kitchen (GYG) started trading on Thursday with a share price of $30 — up 36% on the offer price — making it the hottest Australian IPO in three years.
At $3 billion, the company surpasses even Chipotle, a Mexican-food chain big in the US, says M&A expert Archer Sampson .
Sampson attributes the success of GYG on day one to the fear of missing out from retail investors on the ASX, who have grown in numbers by 13% since the Covid-19 pandemic.
But he doesn't think GYG's day one success is sustainable.
"I'm going to go out on a limb and say it'll be below the listing price of $23 within six months," he says.
Regardless, this is a huge win for the ASX and the local IPO market, he says.
"The market has needed this win. There is a huge pipeline of privates looking to go public, including AirTrunk and Virgin, and they need the IPO door to open," he says.
Michael Hutchens , founder of financial modelling firm Modano , agrees.
Writing in the lead-up to the IPO, Hutchens was critical of GYG's valuation, which was $2.2 billion at the time.
"It is struggling to make money and would in fact have gone broke over the past year if it didn't quietly do a pre-IPO raising of $135 million," he says.
"More than ever, 'success' in business today flows from finance sector connections and the ability to hard-sell a growth story, without any real consideration for business fundamentals or realities."
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But venture capitalist Martin Rogers , who is an investor in GYG, is more optimistic.
Rogers says GYG represents the best fast food chain in Australia.
"My young daughters want GYG over McDonald's or KFC. They might be too young to be stock analysts but they certainly reflect the desire of a quality offering," he says.
He adds the passive investing in ASX200 stocks will also support GYG's share price in the longer term.
"Success for GYG is largely guaranteed if you take a medium- to long-term view then the price of the IPO is less relevant," Rogers says.
"If GYG meets or exceeds their FY25 results, then it certainly has justified that the spicy burrito is a recipe for high growth."
Do you think Guzman y Gomez can be the next McDonald's? Will we see more IPO activity on the ASX after this float? Share your thoughts in the comments.
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--never back down never give up fight for what's right .
2 周This dude like to harm my kids and myself and very much a dumbass and disrespectful and rude and doesn't like his job at all because he knew my situation and the abuse and didn't do nothing none of them Alabama and Georgia area
Building Contractor & Consultant at Freelance (Self employed)
2 个月Agreed! And add …I spend my $ & back the “..:millions of independent roadside taco carts (& budget start ups in our Australia cities) manned by desperate immigrants” selling healther, cheaper food, more often made from local home grown produce and with far more passion & love than highly proceesed preservative packed bucket food all day, every day! And give a tip to, in a small way help/reward these struggling folks who are trying to better their lives and their childrens future. They benefit, we benefit (budget & health wise) and ultimately the country also does, no matter where you live. Advise to American’s …Do it, support them before Trumps fascist ‘deport them’ campaign destroys then & the rich benefits they bring. Mega takaway giants …I invest other places, abundance of market ulternatives, GYG …just another porn in the game
Customer Service Representative at Stramit
4 个月We are enjoying the new opening in Aspendale Gardens menu range. We Don’t like Maccas at all!
Founder & CEO at Diolog | The Australian’s Top 100 Innovators List
8 个月Based on recent data, it’s fair to say IPO activity on the ASX may see a resurgence in the second half of 2024. IPO cycles typically include periods of subdued activity followed by increased listings. The latter half of the year could prove more successful, supported by recent listings such as Redox Limited and Newmont Corporation's dual-listing, as well as Sun Silver's IPO completion. I expect sectors such as biotech, industrials, mining, and consumer discretionary to lead charge throughout 2024. Despite initial skepticism, IPOs like Guzman y Gomez set a promising tone.
Propietario en Cocina las delicias
9 个月Better than McDonald's