Restaurant chain CAVA Group (CAVA) soared 99% in its debut on Thursday, delivering one of the best first-day performances for a $100+ million IPO in the past two years.
For access to more exclusive content like this, sign up for a free trial of IPO Pro, the platform that gives you all of the IPO information you need, all in one place.
Excluding idiosyncratic outlier HKD, four other IPOs have popped more than 99% in the past two years, all of which went public in 2021: German solar-powered vehicle developer Sono Group (SEV), biotechs Icosavax (ICVX) and DICE Therapeutics (DICE), and digital physicians network Doximity (DOCS). Of these, only two currently trade above issue (DICE and DOCS); Sono Group, which led with a 155% first-day gain, is the worst performer of the group, down nearly 98% from offer.
CAVA is the type of growth IPO we'd see more often in a normal IPO market, before the window shut in 2022, and has outperformed despite investors' recent focus on profitability. Pricing above the upwardly-revised range and trading up from there, CAVA's IPO shows prospective issuers that they can achieve desirable valuations, which will likely provide strong encouragement for pre-IPO restaurants and, to a lesser extent, VC-backed tech.
While CAVA's IPO has been deemed a success, initial enthusiasm has dissipated slightly in the aftermarket, with the stock down about 15% in midday trading on Friday.
