Skip to comments.Chipotle Mexican Grill, Inc. (NYSE:CMG)
Posted on 07/21/2012 3:51:29 PM PDT by Cplus
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Probably Chipotle had a lot of trouble making money when they were forced to give up illegals and had to hire American citizens.
Then, too, it was wildly over-priced relative to the earnings growth that was reported. CMG was a roller coaster waiting to drop.
Ever heard of Boston Chicken, Snapple, Krispy Kreme? Guess what, THE VERY SAME THING HAPPENED TO THEM: the mo-mo boys ran them up to the sky, relative to actual hard-dollar value, then they missed earnings or revenues targets, then ... blooey. Food and food service stocks and restaurant chains can only become bid SO high, and then, speaking both practically AND historically, look out below! Where have you been, laddiebuck?
Note to traders: Chipotle shares will likely rally in the short term, but they've a devil of a lot further to fall. I would strongly suggest looking at buying long-term put options, more or less at-the-money, on any rally.
Good trading to everyone!
There is still $100-plus to the downside, but there will very likely be vicious short-term rallies in the near term. "Momentum", or whatever the Street is calling it these days, is NOT a permanent feature of ANY share price, ever.
I’m surprised they lasted as long as they did.
It only took one visit for me to swear off Chipolte forever, after paying top dollar for a terrible burrito that consisted of a tortilla filled with rice that was it for me.
But living in Arizona, i don’t have to put up with overpriced crap whose only resemblance to real Mexican food is that it’s rolled up in a tortilla. I guess most of the rest of the country doesn’t have any better options than the faux-Mexican garbage that Chipolte sells.
That is what happens when you offer up an overpriced yuppie version of Mexican food......
Great minds......I’m in Texas....
Restaurant-chain stocks always do this. They grow to the sky and then crash. The restaurants get old, there are few barriers to entry, and new competitors come along.
You want good stocks that don’t crash, pick industries which are hard for new competitors to enter. Oils, utilities, cigarettes.
This sounds like one Obama built.
Ditto that! Once was enough for me also.
I went to one in Alexandria VA that was packed, but they don't seem to have any good Mexican food there.
Unfortunately, some of the best taquerias around here have closed down since GA passed our illegal immigration law and our construction industry took a dive.
“Restaurant-chain stocks always do this. They grow to the sky and then crash.”
Well put. That’s why I never buy restaurant stocks. The majority of my BUYS are long-term holds.
Thanks for mentioning Krispy Kreme and ruining my weekend. lol!
That's quite a stretch to explain a drop in a stock price.
Here in NM, I had 2 carne asada tacos yesterday (at my awesome little dive mex restaurant) that filled me up for the whole day and cost less than $6. Fortunately, the restaurant didn’t have waterfalls and live mariachi music and I am the winner in that deal.
It is tough to compete with these little Mexican joints that are good. You need to be so much better and that is hard to do.
How do you pronounce “Chipotle?”
The guy started in a little store near Denver University..