Volatility is nothing new for shareholders of Shake Shack (NYSE: SHAK).
After crossing $100 per share again last month, the stock dropped 28% in a single day following the release of its first-quarter earnings report
The pain came despite Shake Shack opening a record number of stores and posting same-store sales growth of 4.6%, doubling the rate of growth from fiscal 2025. Unfortunately, top-line growth failed to translate to the bottom line, as Shake Shack swung to an operating loss of $2.6 million from a profit of $2.8 million a year ago. Earnings per share came in at zero, missing analyst expectations by a wide margin.
Nevertheless, the company’s founder remains bullish on the company’s stock. Costs overwhelm growth The core issue for Shake Shack is that costs are rising faster than sales. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 9% to $37 million in the first quarter, and margins compressed from 12.7% to 10.1%.