Investing

This Is How Much Chipotle Stock Is Up Since Its Worst Era Ever

Gerelyn Terzo

Published: April 25, 2024 6:16 pm

Last Updated: April 25, 2024 6:51 pm

On what was a decidedly down day in the markets, Chipotle (NYSE: CMG) stock managed to buck the negative trend. Despite losses in the Dow Jones Industrial Average, Nasdaq and S&P 500, shares of the fast-casual retailer soared nearly 7% on the day to above the $3,000 level. Investors rewarded CMG for raising its full-year guidance owing to rising foot traffic that continues to blow away the competition.

Chipotle now pegs full-year comparable restaurant sales growth, which reflects activity at locations open for at least one year, in the mid- to high-single-digit range. Previously, the company was targeting a jump in the mid-single-digit area. Strong consumer demand is an indication that Chipotle’s strength is more than just a byproduct of high burrito prices. Chipotle’s entire quarter was strong, beating on both the top and bottom lines while the operating margin grew from 15.5% to 16.3%. 

Chipotle’s stock is trading within a stone’s throw of its 52-week high of $3,144. Brian Niccol, Chipotle’s current CEO and a Yum Brands (NYSE: YUM) alum, might have thought he’d never see this day. He took the reins in the wake of Chipotle’s food-poisoning era, the worst time in the company’s history. Chipotle defied the odds and so too did its stock price, in both the short and long terms. 

Buy & Hold

Chipotle, with a current market cap of $85.6 billion, might be a restaurant stock, but it trades more like a high-growth tech play. Year to date, CMG shares have advanced more than 30%, surpassing the performance of tech giants like Meta (Nasdaq: META) and Amazon (Nasdaq: AMZN). Over the past six months, CMG has added 60% to its value while customers have refused to flinch over higher ticket sizes that have risen alongside higher menu prices.

But it wasn’t too long ago that Chipotle’s stock was stuck in a nightmare of food poisoning instances, causing Wall Street to wonder at the time if the company’s best days were behind it. Chipotle has had several health scares, the most recent of which unfolded nearly a decade ago. In 2015, CMG shares shaved off 25% from their value — plummeting from $750 to $550 — in two months in response to an E. coli outbreak at restaurants in various regions of the country.

Customers were staying away in droves, replacing their Chipotle cravings with other Mexican brands for months or longer. Wall Street analysts were stepping over each other lowering their growth estimates. By year-end 2016, Chipotle stock was trading in the $300 area, as things went from bad to worse. In 2017, the stock closed below the $300 level at $289. We’ll use that as our low point.

Investors with steel hands who were able to see the forest from the trees and took a buy and hold strategy from the low point have been richly rewarded with a whopping gain of 954% today. According to Stoculator, if you had invested $1,000 in Chipotle stock at year-end 2017, that allocation would be worth over $10,000 today for an annual rate of return of approximately 44%. 

These days, sentiment couldn’t be better. Investors are gearing up for Chipotle’s maiden stock split in its three-decade history, and it’s one for the record books. Last month, Chipotle’s board approved a 51:1 stock split, representing one of the biggest such splits in NYSE history.