Chipotle Mexican Grill Case Analysis

Chipotle Mexican Grill Inc. was shorted on April 22nd, at $440.95 per shares with a total of 200 shares. Using technical analysis, I saw a decline in the stock price occurring. The price trend generated a descending triangle pattern which broke through and went below the support line of $600 and continued to decrease. The MACD of -8.39 also depicted a negative moving momentum. The volume significantly rose, but then decreased which means less people are purchasing the stock, making the stock price go down due to low demand. All of these factors indicated a bear market. I also used fundamental analysis and reviewed CMG’s company earnings and headlines. The PEG Ratio was at 7.35 which is bigger than two meaning the stock is overpriced. This could mean that investors will not purchase this …show more content…
This translated to a market capitalization per share of common stock of $718. In October 2015, numerous reports of food-borne illnesses were tied to Chipotle, and its stock took a hit. Total market capitalization of its stock plummeted to $14.7 billion in December 2015. Market capitalization per share of common stock dropped to $479. Chipotle made the best of the situation by spending $300 million to repurchase approximately 600,000 shares of its own stock. Still, the drop from September 2015 to December 2015 represented a loss of 34% which as impacted them in 2016 until this day. Nathan wrote an article for Yahoo Finance stating that despite implementing food safety measures, Chipotle posted lower-than-expected same-store sales growth in 1Q16. The same-store sales growth was -26 in the first three weeks of April. As a result, analysts revised their earnings estimate for the next four quarters. This compelled analysts to lower their price target for the next 12 months. However, CMG is doing very well at correcting their supply chain management system and gaining back their loyal