Hot Stock Alerts

Potential Breakout Stocks of the Day:

Stock Market Closing Report - 7/6/20 July 6, 2020

Thursday, December 12, 2019

Why is Shake Shack (SHAK) Stock Down?

Why is Shake Shack (SHAK) stock going down?

December 12, 2019 - Shares of Shake Shack (SHAK) have dropped from $105 to $57 since September 2019.  I will explain why this happened and what the future holds for SHAK stock in 2020 and beyond.

- SHAK was priced for perfection above $100
- Uncertainty around the GrubHub partnership
- Uncertainty about renovating several restaurants in 2020
- Growth stocks have been selling off
- Uncertainty about the rising price of beef and paper packaging

The first reason Shake Shack (NYSE:SHAK) stock has been dropping is the fact that shares were overpriced.  When the company reported same shack sales of 3.6% and strong earnings in August, investors thought this momentum would continue, driving the share price up above $100.  Fast forward to November, the company reported solid earnings but not blow out.   SHAK stock fell back to $70 and continued to decline, recently falling into the $50's where it is now a super strong buy.


















Secondly, management started hinting over the summer that they were studying the different delivery companies and have now decided to make GrubHub (GRUB) the exclusive delivery service.  This change has started to roll out and could provide sales volatility into 2020 as they phase out the other services like Postmates, Door Dash, Caviar, ect.  GrubHub is the best partner because they can obtain customer data and Shake Shack decided they are the best at delivering the food to customers correctly and on time.  The key to food delivery is having a delivery person ready to pick up the food as soon as it is ready.  Wall St. hates uncertainty and this sales uncertainty should be cleared up by June/July.  Shake Shack has already reflected this change in guidance so I'm not worried.

Third, Shake Shack has seen massive sales growth from food delivery.  Five years ago, there was only one way for me to purchase a Double Smoke Shack.  I would walk into the restaurant, order the burger, and wait for my food to be ready.  Now, I can order it from the app or GrubHub.  Digital is the biggest innovation fast food restaurants have seen since the drive thru.  Shake Shack restaurants are extremely busy, especially during peak times.  A revamp of some older locations is needed.

The company decided earlier this year that they would close several restaurants in 2020 for renovations.  The goal is to fix them so they are more efficient in this new digital age where customers are picking up just as much as dining in the restaurant.  These renovations will fuel growth and position older restaurants for future growth.  In the newer restaurants, Shake Shack has very few cash registers.  Here is what the future looks for Shake Shack;  less cash registers, more touchscreens for ordering!

















Lastly, growth stocks have been out of favor as investors move into value stocks right now.  This is just a cycle that will revert back in due time.  Rising beef prices are cause for concern but this should level out in 2020.  Also, delivery and digital orders made for pick up both require more paper packaging which increases costs.  Shake Shack has a strong brand and with that comes pricing power.  If costs continue to rise, they can easily offset this by raising prices.  Most consumers love the food so they won't even notice.  I know I won't mind!

In conclusion, SHAK stock has taken a huge hit lately but shares are now a strong buy and that is exactly what I've been doing.  Two years ago I sold Shake Shack (SHAK) and bought Tesla (TSLA) but recently switched back.  I have been buying SHAK stock since early November and this is now the largest holding in my portfolio.  Shake Shack has an amazing brand, draws big lines, and management is positioning the company for massive growth both domestically and internationally.  SHAK could easily be a $300 stock in 10 years but I'm expecting shares to rebound back to $100 in a year or two.  I will continue to buy throughout 2020 as long as shares remain below $65.

Dow Jones Close 12/12/19 Stock Market Closing Prices

Stock Market Closing Prices - December 12, 2019

Dow Jones Industrial Average ( DJIA ) Close - 28,132.05 Up 221
Nasdaq Stock Market Close - 8,717.32 Up 63.27
S&P 500 Close - 3,168.57 Up 26.94
Bitcoin Price - 7,210
http://dowjonesclose.com

Commodities Closing Prices - 12/12/19
Gold Close - 1474
Silver Close - 16.84
Oil Close - 59.35
Natural Gas Close - 2.34

The Dow Jones Industrial Average closed at 28,132 on 12/12/19, as the stock market surged Thursday.  The USA and China agreed to Phase 1 trade deal which awaits Trump's signature.  Shake Shack (SHAK) rallied into the $60's but then pulled back to $59.  Shake Shack along with TNA are my top stock picks for 2020.  Buy all you can while they are still low!  Check out my Top Stock Picks 2020.  I also updated my Stocks to Watch page.

Check out my Top Penny Stocks 2020 page for my latest penny stock picks.

Dow Jones Futures 12/12/19 December 12, 2019

Stock Market Futures for 12/12/19 December 12, 2019

The Dow Jones and Stock Market are trading near all-time highs.  Will the stock market go up or down on Thursday?  Keep tabs on the stock market futures which will predict the open on Thursday.  If you invest or trade stocks, check out the links below to view my stocks picks for 2020.


Stock Market Futures - December 12, 2019

Dow Jones Futures - Up 22
S&P 500 Futures - Up 12
NASDAQ Futures - Up 4
Bitcoin Price - 7,180
Gold Futures - 1479
Silver Futures - 16.84
Oil Futures - 59.05
Asian Markets ( Nikkei ) - 23,425

View Today's and Yesterday's Biggest Stock Gainers - Bitcoin Stocks

Mortgage Rates 12/12/19 December 12, 2019

By Tim - http://daytradingstockblog.blogspot.com - @stockstobuy -

Home Mortgage Interest Rates - December 12, 2019

Interest rates have been trading sideways in December 2019.  Below is list of Today's Mortgage Rates from Wells Fargo.

Loan Type - Interest Rate - APR - 12/12/19

30-Year Fixed Rate                 3.750% 3.865%
30-Year Fixed Rate VA           3.250% 3.571%
15-Year Fixed Rate                 3.000% 3.221%
7/1 ARM                                 3.250% 3.873%
5/1 ARM                                 3.125% 3.962%

Jumbo Loan Rates - APR - 12/12/19

30-Year Fixed Rate                 3.500% 3.565%
15-Year Fixed Rate                 3.250% 3.311%

Past Rates - Click Here

For the latest updates on the stock market, visit, http://daytradingstockblog.blogspot.com

1 and 3 Month Libor Rates 12/12/19 December 12, 2019

December 12, 2019 - Here are the current libor rates for today. Today's Libor Rates for 12/12/19 are: 1 Month Libor Rate - 1.74050% & 3 Month Libor Rate - 1.88738%. The overnight Libor rate is 1.52538.  As you can see, Libor Rates changed today, December 12, 2019.

-Due to a policy change, Libor rates are published on a 24 hour delay.  They are updated when the results are published.

Here are Previous Libor rates. You can also compare Libor Rates to how the Dow Jones trades.

For the latest updates on the stock market, visit, http://daytradingstockblog.blogspot.com/
Copyright © 2008-2020 - daytradingstockblog.blogspot.com

Stocks to Buy 2020 - Click Here