Submitted by David Stockman – The Contra Corner Blog
During the 150 days since August 4th, Chipotle’s share price has plunged by 45%. Nearly $11 billion of market cap has been obliterated——including $4 billion in the last three weeks.
Accordingly, its market value has now retraced back to March 2012 levels. The hyperventilating CMG bulls who rampaged for 1250 days in the interim have now been taken out back and summarily shot.
Stated differently, what had been $12 million per copy burrito shacks are now on sale for just $6.5 million each and are heading far lower, very fast. But the culprit in this stunning markdown is not the alleged once-in-a-blue-moon outbreak of E. coli, as CMG’s apologists claim.
Chipotle’s recent $24 billion market cap, in fact, is the bubble in extremis which explains the entire financial bubble at large. It is surely the poster boy for the manner in which the Fed-sponsored Wall Street casino has hyped the mundane into the miraculous; and substituted paint-by-the-numbers hockey sticks for substantive analysis and judgment. Continue reading