No, Noodles & Co. Did Not “Punk” Anybody

Fast-casual dining spot Noodles & Co. IPO’ed on Friday for the price of $18 per share, and immediately popped by nearly 100%, eventually closing the day at $36.75. It has since gained another 30% and currently sells at $47.25. Obviously, some underwriters fucked up.

Somewhere beneath all the facts and data is an interesting, accurate story about why they fucked up, but that’s definitely not what Daniel Gross wrote for the Daily Beast today. Instead, he explains that the food snob Wall Street-types were so blinded by the bubble of NYC cuisine, they missed the appeal of Noodles & Co. simply because of its Midwestern focus.

Plainly, Wall Street blew it. The shares soared not because there is some bubble raging in restaurant stocks, or because noodles are a hot new concept. Rather, they soared because traders outside the bubble of Wall Street and the institutional investors they deal with had a different view of Noodles & Co.  And when you take a step back, it seems as if Noodles & Co. was actually set up to punk Wall Street.

I’ll give Gross the benefit of the doubt and assume he was just doing his best to write an entertaining story. It is an entertaining story! But it fails as an explanation of what’s actually going on.

While there probably is some truth to the assertion that Wall Street bankers are snobbier than the average Midwesterner, they’re not stupid. One of any number of cliches could be inserted here: numbers don’t lie, money talks, etc. The slick alpha-types at Morgan Stanley and UBS could surely see past our inherent dowdiness if doing so meant however many extra millions of profit.

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