El Pollo Loco Holdings Inc. (NASDAQ:LOCO) Secondary Offering Doesn’t Meet Expectations
El Pollo Loco Holdings (NASDAQ:LOCO) put up 6 million shares of common stock for sale, filing with U.S Securities and Exchange Commission for a second offering. The underwriters will have the choice to opt for the additional 900,000 shares. Jefferies, Morgan Stanley, William Blair are current underwriters for the offerings. On initial observation of the filing made by the Wall Street, the maximum value of the offering stood at 250 million dollar.
However, since then the shares of the company have been shook by financial jolts. Shares were down by 8 percent in premarket trading, as of November 10th Monday. Because of this, the value of the offering has come down to 200 million. El Pollo (NASDAQ:LOCO) received outstanding initial public offerings as it was something everyone wanted a piece of earlier this year. The initial public offerings, as compared to the second offering were brighter.
In IPO, the firm sold 7.1 million shares at 15 dollars. El Pollo (NASDAQ:LOCO)’s stock became public in July this year and started trading at 18.48. Since then the company’s stock came a long way, ascending as high as 41.70 dollars. If you look at the initial offering of 15 dollars, it can be safely said that El Pollo (NASDAQ:LOCO) has progressed rapidly in a short time. El Pollo (NASDAQ:LOCO) met the market estimates in its earnings report but gained a negative reaction on some fronts such as inflation of prices when it came to products like chicken.
Also, the fact that the company’s stock went up in such a short time, El Pollo (NASDAQ:LOCO) didn’t completely capitalize on its stock surge. Jefferies and Morgan Stanley being underwriters for the offerings are relinquishing a lock-up restriction on El Pollo (NASDAQ:LOCO)’s common stock held by certain of the selling stockholders mentioned in the offerings. El Pollo (NASDAQ:LOCO)’s stock price has dropped since the company asked for a second offering.
This will give an open chance to companies that wish to close in on El Pollo (NASDAQ:LOCO)’s stock. Considering El Pollo (NASDAQ:LOCO)’s capacity and ability to grow and a share price that is way below than the company’s potential, we’d say El Pollo (NASDAQ:LOCO) is up for grabs. It’s unfortunate for El Pollo (NASDAQ:LOCO) that its stock price slipped before the second offering and the fact that the company couldn’t carry the glorious success of the IPO into the second offering.
Things would have turned out really different for El Pollo (NASDAQ:LOCO) that way. For the underwriters, El Pollo (NASDAQ:LOCO) is still worth much. They can see the company’s potential and its capability to generate revenue in the long run. At one point it looked like El Pollo (NASDAQ:LOCO) will capitalize on McDonald’s recent slump but somehow the company couldn’t grasp that opportunity. Now, El Pollo (NASDAQ:LOCO) is left with potential underwriters that are fiercely competing with each other in order to own a major portion of El Pollo Loco Holdings Inc. (NASDAQ:LOCO)’s stock.