Chipotle Mexican Grill Stock Climbs Premarket — Asia Expansion Plans Make Retail Traders 'Extremely Bullish'

Chipotle Mexican Grill shares rose 0.3% in premarket trading on Thursday, in some respite for the battered stock, signaling investor confidence in the company's plans to expand in emerging markets.

The burrito chain announced its expansion into Asia for the first time. The company on Wednesday partnered with SPC Group, a South Korea-based food company, to open Chipotle restaurants in South Korea and Singapore next year. Financial terms were not disclosed.

SPC Group is also the partner and local operator of Baskin-Robbins, Dunkin', and Shake Shack restaurants. 

The announcement initially failed to lift shares, which ended nearly 2% lower on Wednesday, in touching distance of a two-year low. The stock, however, inched higher in extended trading.

Sluggish dining-out trends, particularly in the U.S., have weighed on sales (revenue growth slipped to single digits in the past two quarters) while the stock has tumbled 36% year-to-date.

On Stocktwits, some users suggested the CMG stock may have already bottomed, with the expansion news seen as a potential catalyst for a rebound.

"$CMG I would be crazy not to take another position here! (Which I did) All timeframes of my stochastics are way oversold!" said one user.

Retail sentiment has steadily climbed to 'extremely bullish' as of early Thursday, from 'bearish' a week ago.

Currently, 28 of the 36 analysts covering the stock have a 'buy' or higher rating, with eight rating it 'hold,' according to Koyfin data.

The Asia expansion is the latest in the company's overseas diversification. Through partners, Chipotle expanded to the Middle East in 2023 and plans to open in Mexico next year. As of June, there were 3,800 Chipotle restaurants in the U.S., Canada, the UK, France, Germany, Kuwait, and the UAE.

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