Chipotle Misses on Revenue, Shares Plunge

The restaurant chain's earnings beat Wall Street expectations

   

Shares of Chipotle Mexican Grill (NYSE:CMG) cratered on Friday after the company missed second-quarter revenue forecasts, failing to satisfy high investor expectations.

Investors hammered the stock. Shares of Chipotle plunged more than 22% in Friday trading, falling from over $403 a share yesterday to $312 this afternoon.

cmg Chipotle Misses on Revenue, Shares Plunge
Chipotle Stock Crash Was Overdue

For the quarter, Chipotle posted earnings of $81.7 million, up 61% over $50.7 million in profits during the same time last year.

Revenue at the restaurant chain jumped 21% to $690.9 million compared to last year. Wall Street, however, was looking for revenue of $704.8 million, the Associated Press noted.

EPS for the quarter was $2.56, up from $1.59 last year, beating the $2.30 analysts’ had predicted.

Same store sales rose 8% during the quarter.

For a stock which had seen its value more than quadruple in five years, the revenue miss spooked investors who worried that its rapid rise may have peaked.

For a “momentum stock” like Chipotle escalating investor interest drives share prices up, but as prices rise, investor expectations also soar, eventually become so high that they cannot be sustained and a share-price correction becomes inevitable.


Article printed from InvestorPlace Media, http://investorplace.com/2012/07/chipotle-misses-on-revenue-shares-plunge/.

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