Chipotle Mexican Grill (CMG) Stock: Will Gains Continue?


Chipotle Mexican Grill, Inc. (NYSE: CMG)

Chipotle Mexican Grill has had an incredibly rough time in the market over the past year or so, and for good reason. The company was the center of an E. coli outbreak that led to consumer fears. Of course, that led to empty restaurants throughout the United States. Nonetheless, the company is working hard on bringing consumers back through their restaurant doors. Most recently, we learned about a new loyalty program. Today, we’ll talk about the loyalty program, how the market is reacting to the news, and what we can expect to see from CMG moving forward.

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CMG To Launch Chiptopia

As mentioned above, Chipotle has had a rough time in the market after proving to be the epicenter of an E. coli outbreak. Since the end of the outbreak, the company has been doing everything it can to win customers back. In fact, the company has given away millions upon millions of free burrito coupons. Now, they are working to reach their goals from a different angle.

Yesterday, CMG announced that it will soon be launching Chiptopia. Chiptopia is a new loyalty program that the company is planning to launch. While we haven’t received details on exactly how the program will work, we have learned that the program is designed to reward customers based on the number of times they visit the restaurant on a monthly basis. The rewards program will be launched in July and come to an end at the end of September. In a statement, Mark Crumpacker, Chief Creative and Development Officer at CMG, had the following to offer:

We created Chiptopia to reward our most loyal customers… While Chiptopia Summer Rewards lasts just three months, we will be carefully listening to our customers and using what we learn as we consider the design of an ongoing rewards program.”

How The Market Reacted To The News

As investors,one of the first things that we learn is that the news moves the market. When positive news is released with regard to a publicly-traded company, we can expect to see gains in the value of the stock associated with the company. In this particular case, the news that was released with regard to Chipotle was positive. The company continues to work on ways to bring customers back to their restaurants. As a result, we’re seeing a positive reaction in the market. Following strong gains on the stock yesterday, we’re seeing more upward movement today. Currently (1:16), the stock is trading at $406.43 per share after a gain of $14.71 per share, or 3.76%, thus far today.

What We Can Expect To See Moving Forward

Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from Chipotle Mexican Grill. If you’ve followed my analysis of the stock, you know that my opinion has not changed. The bottom line is simple. At the end of the day, CMG scared consumers with the outbreaks of E. coli and norovirus. Nonetheless, the outbreaks have come to an end and now it’s time to rebuild.

While it may take some time to regain the trust of consumers, the company is definitely working in the right direction. After giving away millions of free burritos, CMG is now launching a reward program, which should yield positive results. At the end of the day, the company has yet to fully recover. It may take another year or so for this to happen. However, as they continue to listen to what their customers want and produce results based on the data, sales will likely continue upward. All in all, I’m expecting to see long-run gains on the stock.

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What Do You Think?

Where do you think CMG is headed moving forward and why? Join the discussion at TalkTRENDZ from CNA Finance!

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