Stock Story -
What Happened: Shares of mexican fast-food chain Chipotle (NYSE:CMG) fell 14.1% in the morning session after the company announced that Brian Niccol, Chairman and Chief Executive Officer, will be leaving effective August 31, 2024. Brian Niccol is expected to join Starbucks (NASDAQ:SBUX) as Chairman and Chief Executive Officer. Following the report, CMG's board announced Scott Boatwright (Chief Operating Officer) as Interim CEO. The stock's reaction suggests markets are likely spooked by the sudden announcement.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Chipotle? Find out by reading the original article on StockStory, it’s free.
What is the market telling us: Chipotle's shares are not very volatile than the market average and over the last year have had only 5 moves greater than 5%. Moves this big are very rare for Chipotle and that is indicating to us that this news had a significant impact on the market’s perception of the business.
The biggest move we wrote about over the last year was 6 months ago, when the stock gained 8.4% on the news that the company reported fourth-quarter results with revenue, same-store sales, and EPS exceeding analysts' estimates. The company's outperformance was driven by strong year-on-year unit growth of 7.4%. It also got a pricing tailwind of 1.0% and opened more restaurants in the quarter than expected (121 vs estimates of 117).
A highlight of Chipotle's 2023 was that it formed its first international partnership with franchisee Alshaya Group in the Middle East. Should the company lean into franchising more going forward, financial performance could improve since the franchise model generally yields higher-margin royalty revenue and requires less capital investments.
Looking ahead, Chipotle expects same-store sales growth in the mid-single digits for 2024, along with 300 new store openings. Overall, this was a fantastic quarter that should have shareholders cheering.
Chipotle is up 13.2% since the beginning of the year, but at $50.87 per share it is still trading 25.8% below its 52-week high of $68.55 from June 2024. Investors who bought $1,000 worth of Chipotle's shares 5 years ago would now be looking at an investment worth $3,111.
![Why Chipotle (CMG) Shares Are Sliding Today](https://d68-invdn-com.investing.com/content/piccfa8d009229f810d2c1510ccb54013f1.jpeg)