Chipotle Mexican Grill Inc (NYSE:CMG) shares are trading higher Wednesday morning, extending a relief rally as the stock rebounds from recent 52-week lows. Here’s what investors need to know.
- CMG is showing upward movement. Get the details here.
What To Know: While the appointment of Carnival Corp CEO Josh Weinstein to the board has stabilized sentiment following a now 43% year-to-date decline, the stock is also reacting to surging optimism regarding a Federal Reserve policy pivot.
With futures markets now pricing in an 81% probability of a December rate cut, the macroeconomic shift is uniquely bullish for Chipotle's specific hurdles. In the third quarter, Chipotle reported a critical 0.8% decline in foot traffic, which CEO Scott Boatwright attributed to “young and lower-income consumers” feeling the inflationary squeeze.
A rate cut directly aids this specific demographic by lowering debt-servicing costs on credit cards and variable loans, immediately freeing up discretionary income for affordable luxuries like fast-casual dining.
Furthermore, lower borrowing costs benefit Chipotle's capital-intensive expansion strategy, while a cooling inflationary environment, which usually precipitates rate cuts, could help reverse the restaurant-level margin compression that saw margins fall 100 basis points to 24.5%.
Investors are betting that monetary easing will reignite the purchasing power of Chipotle's core customer base, potentially reversing the traffic slide that has weighed on the stock all year.
Benzinga Edge Rankings: Benzinga Edge data underscores the company’s long-term potential with a strong Growth score of 72.86, a notable divergence from its near-bottom Momentum rating of 8.55.
CMG Price Action: Chipotle Mexican Grill shares were up 1.92% at $34.04 at the time of publication on Wednesday, according to Benzinga Pro data.
How To Buy CMG Stock
By now you're likely curious about how to participate in the market for Chipotle Mexican Grill – be it to purchase shares, or even attempt to bet against the company.
Buying shares is typically done through a brokerage account. You can find a list of possible trading platforms here. Many will allow you to buy “fractional shares,” which allows you to own portions of stock without buying an entire share.
If you're looking to bet against a company, the process is more complex. You'll need access to an options trading platform, or a broker who will allow you to “go short” a share of stock by lending you the shares to sell. The process of shorting a stock can be found at this resource. Otherwise, if your broker allows you to trade options, you can either buy a put option, or sell a call option at a strike price above where shares are currently trading – either way it allows you to profit off of the share price decline.
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