So hungry are Australian investors for the opportunity to invest in a new, spicy and high profile stock market float that the deafening hype around the upcoming debut of Mexican food chain Guzman y Gomez has drowned out the whispers of caution.
Meanwhile, the market will need to consider if the hype or the absence of fresh listings qualifies as a good reason to jump aboard the Mexican food chain train. Indeed, the buzz around GYG’s float may signal that it is better to wait until the noise dies down. But the mantle of high-growth stock carries a greater level of risk because it only delivers if the growth strategy sold to investors pays off. So, the execution risk is real and lately, some that have pored over GYG’s prospectus have raised red flags around some accounting treatments, and the contribution to profits derived from interest earned on the cash the company will receive from the float.Others have simply declared the restaurant chain is overvalued.
But perhaps the most important element of GYG’s debut on the ASX will be the litmus test it will provide to investors and other companies that are on the sidelines assessing whether now is the right time to hit the IPO market.With a market capitalisation of $2.2 billion, GYG is the biggest new listing since 2021, and it’s coming at a time when interest rates and inflation remain high.