Taking a shot at the Big Dog Chipotle
I have been wanting to short Chipotle for a while now but It has been in this topping pattern for a while and so I never took a position. I wanted to throw out some ideas here.
So the PE ratio of Chipotle is 50... I know no one is really using PE to judge companies anymore, but 50 feels very high to me. The old rule of thumb is that a company with a PE of 50 should be expected to grow to 10x its current size within the next 10 years. This is why such inflated PE has been used for Tech stocks that can exponentially grow a platform and users. Chipotle has a tough competition and it does not seem to be as unique as back when its only competition was Subway. The first mover advantage of Chipotle has faded and its uniqueness has started to be questioned.
Honestly from a social perspective Chipotle is almost at the point where it could be called the Panda Express of Mexican food. This feels like a "Blow-off" top that benefited heavily from the Chipotle App during Covid (Being able to pick up your food by ordering online was a huge boost and great idea) But the app and curbside pickup is now a mainstay of many restaurant chains.
I also look at what the insiders are doing, the CEO is selling stock and the Chief Restaurant Officer has been selling. The majority of insiders (90%) are bearish.
I love taking shots at the big dogs that go unquestioned, so I am taking one at Chipotle.
I say the price is going to 800s within the next 2 years.
Yup Chipotle will lose 30-50% of its value in 2 years.
Watch for a break of the white line around 1400, as soon as that support acts as resistance and we fail to break back up that would be where I enter my position.
Just my humble opinion.
So the PE ratio of Chipotle is 50... I know no one is really using PE to judge companies anymore, but 50 feels very high to me. The old rule of thumb is that a company with a PE of 50 should be expected to grow to 10x its current size within the next 10 years. This is why such inflated PE has been used for Tech stocks that can exponentially grow a platform and users. Chipotle has a tough competition and it does not seem to be as unique as back when its only competition was Subway. The first mover advantage of Chipotle has faded and its uniqueness has started to be questioned.
Honestly from a social perspective Chipotle is almost at the point where it could be called the Panda Express of Mexican food. This feels like a "Blow-off" top that benefited heavily from the Chipotle App during Covid (Being able to pick up your food by ordering online was a huge boost and great idea) But the app and curbside pickup is now a mainstay of many restaurant chains.
I also look at what the insiders are doing, the CEO is selling stock and the Chief Restaurant Officer has been selling. The majority of insiders (90%) are bearish.
I love taking shots at the big dogs that go unquestioned, so I am taking one at Chipotle.
I say the price is going to 800s within the next 2 years.
Yup Chipotle will lose 30-50% of its value in 2 years.
Watch for a break of the white line around 1400, as soon as that support acts as resistance and we fail to break back up that would be where I enter my position.
Just my humble opinion.
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