Chipotle Continues To Serve Up Disaster For Shareholders

Image by: Kurt McKee
By Steven Morrison II

Poor Chipotle Mexican Grill (CMG). They are everywhere and people love their fresh-to-order burritos, bowls, and tacos, but as a corporation they currently suffer from a case of the Rodneys.

Like famed comedian Rodney Dangerfield, Chipotle just doesn’t get any respect right now. But they had a good run with a foot firmly placed on the accelerator, and investors made a killing all the while enjoying the chain’s freshly grilled gourmet Mexican-style cuisine.

Started in 1993, Chipolte made good in their home market of Colorado until they exploded onto the franchise restaurant scene boatsing of better quality ingredients like organics and naturally-raised meats.

It helped that the company was in bed with McDonald’s who jumped on board in 1998, allowing Chipotle to take advantage of their financial investment and access to the burger chain’s legendary distribution network.

Cost were low, business was booming. They eventually parted ways with McDonald’s in 2006 and … got its cool back. Waaaaaay back. They had also grown to more than 500 stores.

Fast forward to April 2012, Chipotle stock had soared to its high of $440.40, a ridiculous number really. Why? At 55 times their earnings, the Chipotle stock was an above-average performer in its class. The golden streets were literally lined with delicious Chipotle burritos.

Then, suddenly, the CMG bounced back like a rubber ball taking 27% of the company’s value with it. It fell all the way to $243 on Oct. 19. Today it closed at just shy of $294.

So where does that leave investors? Wary. Chipotle stock is like kryptonite to the supermen of Wall Street right now. It can’t decide which way it wants to go. It is only for the risky investor only.

Of course, there is always a chance that a disaster could strike, taking the stock down again. We know that is possible (after years of thinking it wasn’t). And that last negative earnings report didn’t help matters either.

All eyes will be on them next time around for sure.

But is the stock is done rising? There is good reason to believe that there is some life left, a few pennies to be made here or there. But it would appear that the bubble has burst and all of the excitement money has already been made.

But those bowls really are tasty.