3 reasons to be bearish on Shake Shack
Shake Shack rocketed nearly 120 percent higher in its first day of trading on Friday, valuing the company at about $1.6 billion.
"I think people see Shack as a changing of the guard," CNBC "Fast Money" trader Tim Seymour said.
Although investors jumped into the stock with enthusiasm on Friday, "Fast Money" traders were more skeptical of the stock, especially after its huge IPO gains.
Shake Shack shares closed just below $46 per share after pricing at $21. The company offered 5 million shares, and the volume brought "extreme squeezing to the upside," said trader Steve Grasso.
"I would be very careful in the next couple days and weeks," Grasso said.
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Investors should be wary of chasing the stock after it more than doubled in one day of trading, said trader Guy Adami. The stock could move to $60 per share or higher in the long term but looks less appealing now, he added.
"It's 'greater fools' theory and you don't want to be the last fool," Adami said.
Trader Brian Kelly would also stay away from Shake Shack in the short term, but added that "it's not a bad stock."
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Disclosures:
Steve Grasso
Steve Grasso is long AAPL, BA, CLVS, EVGN, FB, GDX, GOOGL, IMMR, KBH, KDUS, MHY, MJNA, NVIV, PFE, POT, SO, T, TMUS, TWTR and YHOO. His firm is long USO, FCX, NE, NEM, OXY, RIG, VALE, MCD and KO. His kids are long EFG, EFA, EWJ, IJR and SPY.
Guy Adami
Guy Adami is long CELG, EXAS and INTC. Guy Adami's wife, Linda Snow, works at Merck.
Brian Kelly
Brian Kelly is long BTC=, US Dollar, ZBH5, HYG puts, TWTR call spreads and BBRY call spreads. He is short EWA, EWG, EWQ, EWZ, EWH, EWW, HGH5, yen, Australian dollar, British pound, Canadian dollar, yuan and copper.
Tim Seymour
Tim Seymour is long AAPL, BAC, C, DIS, F, GE, GM, GOOGL, INTC, JCP, BX and SUNE. Tim's firm is long BABA, BIDU, CCU, DSKY, KNDI, MCD, NKE, NOK, SINA, SBUX, TSL and VIP.