Guzman Y Gomez’s (ASX:GYG) launch onto the ASX has been a great success, as far as the first hour of trades is concerned.
Listing at $22/sh, the company’s shares increased to $30/sh out the gate in the first hour after it listed at around lunchtime on Thursday.
Notably, turnover hit an impressive $81M in the first hour, indicating a hotly watched stock – and one of the largest floats on the ASX in recent history.
The company has, by merit of an enthusiastic reception, already outperformed the consumer sector on a one year basis by close to 9% according to a service that ports Morningstar data.
So who’s in the T20?
Barrenjoey is the second largest holder at 10.36% with 10.5M shares. It’s surpassed by the first in lead, TDM Custodial Services, which holds 28.6M shares at 28.2%.
Aware Super holds 6.07% with 6.15M shares.
But the bigger question surrounding Guzman’s rise on Thursday is whether or not the company can last above its float price (let alone the $30/sh mark.)
The company expects to make $10M in FY25, and its growth plans underpinning the company’s lofty $2.2B valuation depends on Guzman being able to grow out its stores to 1,000 individual operating storefronts in Australia.
For reference – only McDonald’s has that many stores in Australia, and McDonald’s is a global giant that makes far more than $10M a year.
That isn’t to say that Guzman can’t achieve this, though, the ambitious nature of such a vision can’t be denied. Whether or not it is realistic at all is, admittedly, in the eye of the beholder.
For comparison, when it comes to the T20, JP Morgan only holds 0.5% of Guzman.
Markets are renowned for not being rational, given that they’re pushed forward by human decisions – and humans aren’t great at naturally thinking in non-human ways.
And, in the cold hard light of day, there’s no reason why a company has to have a fundamental value proposition that makes sense. What the market believes is typically what’s true.
Still: a $3B market cap on $10M in forecast earnings for the next twelve months?
That could be hard to take seriously for too long. Then again, Commonwealth Bank recently hit an all time high despite most analysts calling it a sell for the last year.
GYG last traded at $30.01.