Chipotle Stock Sinks on Comparable-Restaurant Sales Outlook Cut as Young Customers Visit Less Often
13 minutes ago
Young customers are making fewer visits to Chipotle.
Shares of Chipotle Mexican Grill (CMG) sank 17% in premarket trading Thursday, a day after the fast-casual chain cut its comparable-restaurant sales outlook as it said inflation is taking a toll.
The Newport Beach, Calif.-based company reported third-quarter revenue of $3.00 billion, up 7.5% year-over-year but below the $3.06 billion consensus estimate of analysts polled by Visible Alpha. Adjusted earnings of $0.29 per share matched expectations.
Chipotle now sees full-year comparable-restaurant sales down “in the low-single-digit range” versus its July forecast of “about flat” comparable sales. “We continue to see persistent macroeconomic pressures,” CEO Scott Boatwright said in the earnings release.
On a later call with analysts Wednesday, Boatwright said that Chipotle is seeing a “significant pullback” from customers 25 to 34 years old who make less than $100,000 a year. “We’re losing them to grocery and food at home,” he said. “And so, that consumer is under pressure. It is one of our core consumer cohorts. And so, they feel the pinch and we feel the pullback from them as well.”
Chipotle shares entered Thursday having lost about a third of their value this year.
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How the Federal Reserve Could Inflate or Pop an AI Bubble
37 minutes ago
Concerns about an AI bubble have some on Wall Street warily eyeing Silicon Valley, but others say they’re looking in the wrong direction. Washington, D.C.—specifically the Eccles Building, where the Federal Open Market Committee sets monetary policy—is where the fate of an AI bubble may be decided, they say.
“I think you’re going to have a very hard time popping a bubble when the Fed is cutting rates,” said Jeff deGraaf, Chair and Head of Technical Research at Renaissance Macro Research, on a recent episode of the firm’s weekly Youtube series. The Dotcom bubble, the U.S. housing bubble, and the Japanese bubble of the late 1980s all popped either while or shortly after central banks hiked rates, according to deGraaf.
Al Drago / Bloomberg via Getty Images
Artificial intelligence has propelled stocks to record highs this year, but recent developments have raised some red flags. A series of circular deals by the likes of AI bellwethers Nvidia (NVDA) and OpenAI have drawn comparisons to the vendor financing agreements that fueled bubbles in the 1990s. The Magnificent Seven account for 35% of the S&P 500, evidence of an increasingly concentrated stock market. And the benchmark index’s price-to-earnings ratio isn’t far off the Dotcom Bubble’s peak.
“I think it’s early,” DeGraaf said of a potential AI bubble, evidence of which he argued doesn’t appear to be “rampant” yet. Though, he warned, “you could have [a] world play out where the economy softens, the Fed is forced to get more aggressive, and the market absolutely goes into the stratosphere because they’re looking at the liquidity. And I think that’s a big disconnect that people don’t appreciate.”
Read the full article here.
Stock Futures Point Lower After Trump-Xi Meeting, Powell Warning, Big Tech Results
53 minutes ago
Futures tied to the Dow Jones Industrial Average were down 0.3%.
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S&P 500 futures were 0.1% lower.
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Nasdaq 100 futures also were down 0.1%.
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