We’ve all read the jokes on twitter about Chipotle’s E Coli problem. I know I have cracked a few bad ones, but none of you have a real sense of humor so I don’t give a shit.
I am here to say that regardless of what Chipotle’s earnings look like come December 31st, it will not matter in the long term. Millennials being obsessed with eating Chipotle is far from over. Every other day I have friends and family asking me whether or not it is safe to eat at the fast-casual restaurant again. As if I am some sort of FDA official. News flash, I am not. But I am a man living in suburban American surrounded by crazed people obsessed with their burritos who are indeed willing to pay extra for E Coli if that means they can get their burrito bowl fixins’.
This company has taken strides in the past to show its customers how much they care. Take for instance when they withheld the sale of carnitas because some farmers were caught banging the livestock or something. I think that’s what happened? Society as a whole moves on and forgets everything within two weeks anyhow. Our short attention spans keep us from holding any significant grudges against companies that fill our guts with edible pleasure. Remember when people had it out for Chick-fil-a? I bet you forgot about that one.
Chipotle has been taking out ads to reassure the public that they will do everything they can to improve on their practices and keep the food safe. Quite honestly, if they would just send a mass message out through their mobile app saying, “Hey, the E Coli is gone.” People would march by the thousands back to the burrito palace and buy up everything.
Here is the income statement for the last three years…
If this E Coli business DOES INDEED put a significant dent on Chipotle’s net income at this years end…so the hell what. Many investors/market speculators/general assholes don’t understand that the market, along with everything else in life cannot and will not go up exponentially at all times. There are highs and lows to everything. EVER. EEEE. THING! So get over it.
If the numbers are weak come December 31st, I see it as a buying opportunity, not the end of the burrito eating world. Unfortunately my words may not be graded until a few years from now but I don’t know much of anyone that bothers with REAL long-term investing anymore.
Anyway, lets look at the last three quarters..
The only numbers I care about is net income really. I mean, you go into business to make money. MONEY. If you are consistently making a profit then you’re a champ in my eyes. The largest increase was in the spring months. Weather got warmer and people were willing to venture outside again. It makes sense, does it not? The point I am trying to make is. If the numbers are weak come December 31st, it should not hinder your ability to reason with the writing on the wall. Chipotle is here to stay. I will probably be getting a burrito bowl later because I can. I’ll report on how fucking delicious it is.
Oh and it turns out Chipotle indeed does report E Coli on their balance sheet.. who knew.
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I see this as a case where company and stock performance may diverge. Chipotle could easily slide $100 long term from uncertainty but the business itself is solid even if a few people get e coli.
Don’t you find it weird that stock performance and company performance can diverge from each other? Once that happens what is the stock price even based upon.
Stock prices are based on many things. Company performance seems to be important only in certain situations. Other times, total earnings are skewed by buy-backs, or the change in earnings to change in price can be muted by guidance or a dividend. It only takes two people to determine the value of something.
Stock prices are determined by FUTURE expectations of performance / income / sales ect.
Because no one but Jim Cramer knows the future, we must argue over what will happen in 2, 5, 7, or 10 years for a company. When these arguments take place the stock moves via demand & supply battles in numeric terms. Sometimes good news
The market works this way until the FED gets involved and makes everything go up in price no matter what the supply/demand equilibrium should be.