NEW YORK (TheStreet) -- Have investors lost their appetite for Shake Shack (SHAK) - Get Report? Shares are down nearly 3% Wednesday but TheStreet's Jim Cramer, noted the specialty burger company's stock has nearly tripled from the initial public offering price of $21 in late January.
Now commanding a market cap of $2.2 billion, it has been the wrong move to bet against Shake Shack, said Cramer, manager of the Action Alerts PLUS portfolio, during CNBC's "Stop Trading" segment. The stock is going through a "gigantic short squeeze." That's why investors shouldn't short a stock too early, he added.
While shares of Shake Shack are overvalued -- trading at 18.3 times sales -- its investors are serious believers, Cramer explained. These are not the type of investors who think in the short term or will sell on most news. They will stick with the stock through good times and bad.
The lockup expiration -- when insiders can sell their shares -- won't happen until July 29, so the stock can continue to move higher. Cramer cautioned short-sellers to be careful selling newly public stocks, such as Shake Shack.
At the time of publication, Cramer's Action Alerts PLUS had no position in companies mentioned.