Ryan is an attorney and valuation specialist residing in Chicago. He chronicles his thoughts and research on FranchisePundit.com. You may reach him by email ryanknoll@gmail.com or mobile telephone 312-212-3423.
Chipotle Mexican Grill Inc., a majority owned subsidiary of McDonald’s Corp., plans to offer 7.9 million shares for between $15.50 and $17.50 a share in an initial public offering, according to a regulatory filing on Friday.
http://www.chicagobusiness.com/cgi-bin/news.pl?id=18917
UPDATE: Jan 25, 2006
Chipotle may sell stock at $18 to $20 a share, up from an earlier estimate of $15.50 to $17.50 a share, the Denver-based company said in a regulatory filing
UPDATE: Jan 26, 2006
After the 7.9-million-share offering priced at $22 a share, Chipotle shares doubled to close at $44 Thursday, after reaching as high as $48.28. Chipotle sold 6.1 million shares in the deal, raising about $134 million, while its parent, McDonald’s, sold 1.8 million shares.
The 13-year-old burrito and taco purveyor currently has about 480 stores and produced revenue of $471 million in 2004, up 49% from 2003.
At $44, shares of Chipotle are trading at roughly 80 times earnings. Meanwhile, Applebee’s and Ruby Tuesday are trading closer to 20 times earnings, making Chipotle’s valuation look laced with some irrational exuberance, even when its growth prospects are accounted for.
Part of the IPO proceeds will be used to pay down a $30 million line of credit with Chipotle’s parent.
Did anyone buy in on this? I didn’t. The article made a good point that Chipotle is trading 80x earnings, and Applebees, by contrast is trading at 20x earnings.
Definitely overpriced. The food has as many calories as a burger.
It’s at $47.50 in afterhours trading today. I still think it’s over priced
Good analysis of the Chipotle IPO here
http://stocksandfunds.blogspot.com/
This is the biggest stock short ever. #1 is correct when saying that it trades at a premium (80X earnings) Outrageous and the shorts will win on this
big. Almost guaranteed. Stock took off because of the novelty and momentum, (momo sales). Rest assured earnings and forecasts during
upcoming quarterly reports will bring this thing back to earth. Just My Humble Opinion naturally.
Good luck to you all.
You guys were all wrong. I bought Chipotle stock the day it went public, and now I am a millionaire and have retired from my job at the age of 42.
wrote on August 16, 2007 @ 10:51 pm:
The price slightly more than doubled since Jan 2006. If you put a million in and made 120% return when the market made about a 20% return in two years, congratulations!! Picking stocks is fun, but it is really just controlled gambling with the informational disadvantage of retail investors. I used to trade a lot but now I stick to low cost mutual funds and occasionally ETFs.