Chipotle (CMG) and Starbucks (SBUX) shares are making big moves in opposite directions this morning.
Starbucks announced that it would be replacing CEO Laxman Narasimhan with Chipotle’s current CEO Brian Niccol.
The announcement that Narasimhan would be leaving wasn’t unexpected.
Narasimhan took over the helm at Starbucks in March 2023.
Since then, the company has continued to suffer as it battled weak China sales and a slowdown in sales in the United States including a 3% drop in same-store-sales in the latest earnings report.
Who is replacing Narasimhan is a surprise.
Brian Niccol has served as the CEO of Chipotle since 2018 where he has seen the stock increase more than 700% under his tenure.
Niccol has helped the company through a number of adversities including the Pandemic and multiple food borne illness breakouts.
More recently, Niccol successfully defended the company as it was called out for cutting back on the quantity of ingredients in their menu items to save money. Those claims turned out to be false.
Chipotle shares are trading 10% lower after the news but remain in a long-term bullish trend.
Starbucks shares are now trading 23% higher, putting the stock back above its 200-day moving average.
Today’s massive move in Starbucks shares also puts the stock above its 20-month moving average. That trendline currently resides at $94. Starbucks stock would transition into a bull market trend if the stock were above to remain above this long-term trendline.
A word of caution: New CEO announcements tend to have a “Honeymoon Period”, meaning that investors will celebrate the change with a strong move like today’s, followed by a pullback in the stock as the company returns to “everyday life” and the challenges that have had Starbucks in a long-term bear market trend.
Patience is the name of the game here as Starbucks is not likely to see dramatic changes to the company’s results for at least 2-3 quarters of operation under the new CEO’s guidance.
As for Chipotle, the stock has been under pressure since mid-June and today’s move is adding to the weakness.
