Chipotle: Here’s Why the Stock is Tanking Post Earnings
Chipotle reported earnings of $2.27 per share, which missed the expected mark of $2.30 per share. Revenue was also less-than-expected, coming in at $701 million instead of the anticipated $702 million.
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Investor reaction was swift and negative as the poor third-quarter performance raised real concerns about Chipotle’s troublingly slow growth. The market reflected these anxieties, as shares plummeted more than 10 percent in after-hours trading.
The bad news also begs the question: was David Einhorn correct again? Earlier in the month, the influential, billionaire hedge fund manager shorted Chipotle stock, citing stiff competition and increasing food costs as reasons the fast-casual food chain would run into problems in the future.
Whether Einhorn was right, or whether he helped create the problems to begin with by blasting the stock, Chipotle faces real challenges going forward as it hopes to return to the high levels of growth it once enjoyed. Right now, the magic appears to wearing off, as share prices are down 37 percent from just three months ago.
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