Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Chipotle Mexican Grill, Inc. Popped 12% in November

By Travis Hoium - Dec 5, 2017 at 7:23AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

You know something is wrong if a stock pops when its CEO steps down.

What happened 

Shares of burrito giant Chipotle Mexican Grill, Inc. (CMG -0.04%) jumped 11.9% in November, according to data provided by S&P Global Market Intelligence, after CEO Steve Ells announced he is stepping down as the leader of the company. 

So what 

Ells founded Chipotle in 1993 and built the company into what it is today, but hasn't been able to turn around its reputation after food safety issues first popped up in 2015. The move came about a year after co-CEO Monty Moran, who shared the job with Ells for a while, stepped down. 

Two burritos on a table.

Image source: Getty Images.

Ells will stay on as executive chairman once a new CEO is found, leading the board of directors. It's not clear who will take over or how they will execute a turnaround, but management certainly thinks it's time for new people to create a vision for the future. 

Now what 

It's never a good sign when your stock pops after the CEO steps down, but that's exactly what happened with Chipotle. Ells built the company into what it is today, but the scale of Chipotle's current operations may require a greater focus on efficient operations that Chipotle may be lacking. 

The CEO stepping down doesn't ensure future growth or an end to food safety issues, but new thinking in leadership may be welcome for Chipotle and that's what the market was betting on last month.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Chipotle Mexican Grill, Inc. Stock Quote
Chipotle Mexican Grill, Inc.
$1,306.80 (-0.04%) $0.46

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.