Chipotle and Montezuma's Revenge, Einhorn's Revenge


Chipotle Mexican Grill Inc. (NYSE: CMG) is trading today just like any other junky fast-food restaurant chain when bad news arises. Shares are down by what is an exceptional amount, but now the stock has wiped out so many gains that its stock is at a 52-week low.

The Mexican food seller lowered its earnings expectations, in part due to food inflation impacting its bottom line. Now price hikes are becoming more evident, and it will be interesting to see if Chipotle-goers will pay up or whether they will just head down the street to Taco Bell with its lower prices.

Wedbush has downgraded the stock to Neutral today, but we also have seen that Jefferies took down its targets as well. Chipotle's prior 52-week trading range was $277.26 to $442.40, but now shares are down 13.7% at $246.90. Amazingly, Chipotle still has a market value of $7.8 billion against expected 2012 sales of $2.7 billion or so.

David Einhorn is getting the last laugh on his big call when he said he was short selling Chipotle in early October. Shares were closer to $330 before that became known, and you know he had been short at higher prices than that as that was just when he decided to disclose that position.