Morgan Stanley harpooned Shake Shack shares (SHAK), opining that the stock looks overpriced. This is tough to hear for investors, because in the same breath Morgan Stanley said Shake Shack was a “powerful emerging brand executing on all its early commitments.” The burger and blender joint can’t be blamed for asking: what else can we do to get some love?
But the problem actually might be that people love Shake Shack too much. And that “powerfully emerging brand” aspect is priced into the stock so that despite its execution, Shake Shack couldn’t possibly meet expectations. They’re too damn high. Say a girl wants a prince for a boyfriend and she finds a decent, smart, kind, financially secure guy instead. But one who doesn’t own a castle or a crown — that’s Shake Shack. It’s terrific, but it’s no prince. Stop pricing it like it’s a prince, says Morgan Stanley. Then we’ll dig in.