Despite the fact that Chipotle may make a tasty burrito, the company has gone through its fair share of problems lately. The company’s stock has been in a free-fall and that has only gotten worse as of late.
BNN reports that :
Chipotle Mexican Grill Inc’s (CMG.N) shares slumped to their lowest in nearly five years after disappointing results on Tuesday suggested that the burrito chain’s recovery from a food-safety scandal would take much longer than expected. Shares fell 15 per cent to US$277 in early trading on Wednesday.
A 15% loss in one day is catastrophic for any stock, never mind one that has been in decline for over a year. This latest news has shaken investor confidence to the breaking point. BNN reports that “at least nine brokerages cut their price targets” for the stock.
Even CNBC’s Jim Cramer is feeling bearish on Chipotle; when told that the company’s CEO would be making adjustments he said:
“There is no time, this is America and it’s business. Chipotle is not going to get the time. The stock is going to go lower.”
Cramer went on to point out that while companies like McDonald’s have impressed with their rebound performance this year, Chipotle does not seem to have anything in the pipe to suggest anything other than continued decline.
Investors should take note of these warnings and consider cutting their losses with Chipotle if they do own the stock. While the company has promised to make changes, the massive decline in their stock’s evaluation coupled with lagging growth could make this one of the worst stocks of the year.
To read BNN’s article on Chipotle’s woes, click here.
To read about CNBC’s Jim Cramer’s take on Chipotle’s situation, click here.
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