Investors' obsession with Chipotle might finally be dwindling
The longtime darling of the restaurant industry has enjoyed several years of robust double-digit revenue growth and a soaring stock price to match. Shares skyrocketed to $727 in February of this year, up 1,516% since Chipotle's IPO in 2006.
But investors are slowly turning away from the chain, writes Jack Willoughby at Barron's.
The company's stock price has fallen 16% to $609 since February, and investors expect it to drop another 15% to 20% to below $500 this year, Willoughby writes.
Investors could be spooked by a number of challenges confronting Chipotle this year.
The company is battling pork shortages, rising labor and beef costs, and an unexpected backlash following its decision to remove GMOs from its menu.
Yahoo Finance
"They're opening 200 new units a year," Lieberman told Barron's. "It's very hard to find that many good locations and sustain such a rapid expansion without cannibalizing existing units or accepting less-attractive locations."
Chipotle also runs the risk of expanding into areas where its "food with integrity" isn't as highly valued, argues Ken Kurson at Esquire.
"Will customers at airports and military bases and mall food courts - all cited as growth areas by the company - care as much about food with integrity?" Kurson asks.
Despite its falling stock price, Chipotle is still a successful business with strong double-digit sales growth year over year.
On average, Chipotle's revenue has grown 22% annually for the last five years.
But Wall Street expects that growth to drop to 17% this year, following two quarters that narrowly missed analysts' expectations, Willoughby notes.
A Chipotle spokesman told Business Insider that the company doesn't comment on opinions or speculation regarding its stock price.
- I spent $2,000 for 7 nights in a 179-square-foot room on one of the world's largest cruise ships. Take a look inside my cabin.
- Colon cancer rates are rising in young people. If you have two symptoms you should get a colonoscopy, a GI oncologist says.
- Saudi Arabia wants China to help fund its struggling $500 billion Neom megaproject. Investors may not be too excited.
- Catan adds climate change to the latest edition of the world-famous board game
- Tired of blatant misinformation in the media? This video game can help you and your family fight fake news!
- Tired of blatant misinformation in the media? This video game can help you and your family fight fake news!
- JNK India IPO allotment – How to check allotment, GMP, listing date and more
- Indian Army unveils selfie point at Hombotingla Pass ahead of 25th anniversary of Kargil Vijay Diwas
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market