Shares of Shake Shack dropped 20% on earnings day despite record revenue, down 28% year to date compared to S&P 500’s 13% rise. The company added 63 stores, grew revenue by 12.6% year over year, but missed same-store sales growth expectations. Shake Shack aims to open 1,500 stores, growing net income by 77%. Warren Buffett emphasizes pricing power as crucial for businesses, and Shake Shack shows strong pricing power with 18 quarters of same-store sales growth. The company’s fastest store opening rate in history, increased restaurant-level profit margins, and loyal customer base make it a compelling long-term play. However, with an expensive valuation and high expectations, investors should proceed with caution.

Read more at Nasdaq: Down 28% for the Year Despite Record Revenues Last Quarter, Is Shake Shack a Buy?