Investors bet that Sweetgreen will make sweet amounts of green

American fast-casual salad chain Sweetgreen priced its IPO at $28 per share yesterday. Selling 13 million shares in its IPO, the company’s early gross proceeds from the transaction total $364 million, before taking shares reserved for its underwriting banks into account.

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For Sweetgreen, the pricing is a win. The company initially expected to price between $23 and $25 per share, meaning that it sold shares at a higher price than it had anticipated. And Sweetgreen sold 500,000 more shares in its IPO than its final S-1/A filing indicated.

Given that investors made a larger, more expensive bet on Sweetgreen than we might have anticipated, there’s work to do.

Let’s calculate the company’s IPO valuation, using both simple and fully diluted share counts. Then we’ll dig into Sweetgreen’s final IPO revenue multiple to understand how investors are truly valuing the company. From there, we’ll see if the company’s valuation squares up with what we’ve seen from other recent technology-enabled IPOs.

Why are we paying attention to Sweetgreen? Because it started raising external capital in the mid-aughts and kept at it through a Series I in 2019. More simply, a host of private investors, including venture capitalists, bet on Sweetgreen. So, we care.

Sweetgreen’s IPO valuation

Before it added 500,000 shares to its IPO — 575,000 if we include 75,000 shares placed into its underwriters’ option pool — Sweetgreen expected that it would have 106,311,529 shares outstanding after its IPO. That figure rises to 108,761,529 shares if we count the additional equity sold and the full total of shares reserved for underwriters.

At that new share count at $28 per share, Sweetgreen is worth $3.05 billion.