👉 Background: Guzman y Gomez opened its first store in Sydney in 2006 as a Mexican fast food chain.Since then, it has grown to operate over 230 stores in Australia, Japan, Singapore and the US. Last year, Guzman y Gomez launched the largest IPO on the ASX with a market cap of $2.2 billion.

‍👉 What happened: Since its IPO, GyG's share price had more than doubled. So clearly, people are willing to bet big on burritos. Late last week, GyG has said it’s on track to beat its prospectus profit forecast this financial year, thanks to more brekky sales and more delivery orders.

‍👉 What else: Although it's good news for the burrito-kings, its share price plummeted more than 10%. Apparently, investors didn’t really care about those results - because while it's dominating in Australia, its US stores didn’t perform so well.

What's the key learning?

💡A significant part of a company’s valuation is often tied to its future growth prospects rather than its current earnings.

💡For GYG, a substantial portion of its share price reflects investor expectations of successful international expansion, particularly in the lucrative US market. But, the US network sales dropped by 12.7% and their losses are getting bigger too.

💡For GyG, turning around its US operations isn't just crucial for revenue growth, but also for maintaining its high valuation. GyG isn’t just selling burritos... it’s selling the dream of world domination — one taco at a time.