Chipotle Mexican Grill stock price has crashed in the past few months, moving from a high of $66.6 in December to the current $48. It is hovering near its lowest level since January 29 last year. This article explains why the CMG share price is on the cusp of a bearish breakdown after forming a double-top pattern.
Chipotle stock price is on the verge of more downside
The weekly chart shows that the CMG share price has been in a strong downward trend in the past few months. It initially peaked at $69.15 in 2024 and has struggled to move above that level.
Chipotle stock has formed a double-top chart pattern at $66.6 with a neckline at $48.20, its lowest level in August last year.
The stock has formed a bearish pennant pattern, a popular continuation sign. Additionally, it has fallen below the 50-week and 200-week Exponential Moving Averages (EMAs), indicating that bears are in control. The two lines are about to cross each other, forming a death cross pattern.
Oscillators like the Relative Strength Index (RSI) and the Awesome Oscillator have all pointed downwards. Therefore, the Chipotle stock price will likely continue falling in the next few months.
The initial CMG stock price target will be $44, along the ascending trendline that connects the lowest swings since March 2020. If this happens, the next point to watch being at $35.37, its lowest level in October last year. This target is about 26% below the current level. A move above the 50-week moving average at $54 will invalidate the bearish view.
CMG earnings ahead
Chipotle share price has crashed as concerns about the American economy continue. These concerns have continued rising after Donald Trump’s Liberation Day speech in which he announced his reciprocal tariffs on all countries.
Before that, Trump announced a 25% tariff on all goods from Mexico, allegedly for its role in the fentanyl business.
These tariffs means that Chipotle is now paying more money for its inputs since it sources about 50% of its avocados from Mexico. Other suppliers are from countries like Peru, Colombia, and the Dominican Republic.
A company like Chipotle can only respond to these tariffs by increasing prices on products sold on its stores. The challenge is that a 25% hike will lead to lower sales. The company can also take some of these tariffs in its income statement, which will normally lead to a margin squeeze.
Further troubling for Chipotle is that consumer confidence in the US has continued falling in the past few months. A recent report by the Conference Board showed that confidence plunged sharply last month.
Therefore, the upcoming Chipotle earnings will provide more color on its business and forward guidance. Wall Street analysts estimate that the company’s revenue rose by 9.5% in the last quarter. The most upbeat analyst see its revenue coming in at $3.08 billion. Chipotle Mexican Grill has a long record of beating analysts estimates.
The average estimate for Chipotle’s earnings per share (EPS) is $0.28, up from the $0.27 it made last year. Analysts expect that its annual revenue will grow to $12.6 billion this year, followed by $14.3 billion in 2026.
Wall Street analysts expect the Chipotle stock price to rise to $62.35, up from its current level of $ 48.70. These analysts cite its strong market share in the casual dining industry, and the fact that Scott Boatwright, its CEO, worked closely Brian Niccol, the previous CEO who joined Starbucks last year.
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