InvestingPro’s fair value warned CAVA was 43% overvalued before 50% drop

In September 2024, CAVA Group, Inc. (NYSE:CAVA) was trading at $121.25, with shares buoyed by strong momentum and investor enthusiasm. However, InvestingPro's Fair Value analysis warned that the stock was 42.77% overvalued at $68.52. Two years later, in September 2026, shares had dropped nearly 50% to $60.76, validating the bearish assessment.

The analysis, which combines multiple valuation methodologies to estimate a stock's intrinsic worth, highlighted concerns such as a high price-to-earnings ratio of 147 and EV/EBITDA multiple of 68.5, as well as the company's exposure to competitive fast-casual market pressures. Despite impressive revenue growth of 62.5% and EBITDA increase of 82.9%, the valuation reset showed that strong operational performance cannot indefinitely support excessive valuations.

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