The fast-casual burger chain likely benefited from a tailwind in the market as the S&P 500 rose 6% on hopes for a stimulus bill from the federal government that could put cash directly in Americans' pockets at a time when many are getting laid off or seeing income decline from the coronavirus crisis.
On Monday, Shake Shack announced that it was converting to a "To-Go" model temporarily because of the COVID-19 situation. It also pulled its guidance for the year.
The stock plunged yesterday alongside the market, though today investors seemed to be encouraged by the news as it may be a sign that the company continues to get some business during the crisis.
The stock finished the day up 13.6%.
This morning, Deutsche Bank analyst Brian Mullan lowered his price target on Shake Shack from $71 to $51 in response to the company's update and held his rating at Hold. Mullan's revised price target still called for more than 50% upside before today's gains, however.
The burger chain is likely in for some challenging times. New York, New Jersey, and Connecticut, by far its biggest market, imposed a ban on restaurants with the exception of takeout and delivery, and New York City is considering imposing a "shelter-in-place" that would further restrict residents from going outside.
Shake Shack did note that delivery is available in all cities from Grubhub and Seamless as well as other delivery apps in some locales, which should help sales.
Even with today's jump, Shake Shack shares are down 51% since the coronavirus sell-off began on February 24. The stock was high-priced before the recent sell-oof, and could have further to fall. Still, when the crisis fades, it's likely that patrons well flock back to its locations, delighted to be out of their homes and ready for a tasty burger. The company has a great brand and near-record average unit volumes for the fast-food industry. While the outbreak be a stunning blow, it's no knockout punch.