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Chipotle loses its sizzle. Stock plunges 15%

October 19, 2012: 10:23 AM ET

Influential hedge fund manager David Einhorn recently told investors to short Chipotle's stock.

It looks like David Einhorn's latest prediction may be coming true.

Shares of Chipotle Mexican Grill (CMG), which Einhorn recently recommended shorting, got slammed after the casual restaurant chain reported earnings that fell short of forecasts. And, although revenue was roughly in line with estimates, investors were disappointed.

Chipotle's stock sank more than 10% after-hours Thursday. On Friday, shares fell more than 15% before gaining back some ground.

I fortuitously  bumped into Einhorn on my way out of the Time Warner Center (where CNNMoney is housed) Thursday night. Einhorn, the founder of hedge fund Greenlight Capital, said he wasn't surprised by Chipotle's earnings but hadn't had time to dig into them yet.

Earlier this month, Einhorn told investors to bet against Chipotle's stock. Einhorn, known for his early calls on the looming blow up of Lehman Brothers, said Chipotle's torrid growth pace wasn't sustainable, particularly with Yum! Brands' (YUM) Taco Bell making a push into upscale burritos.

Consumers, who once seemed to have an endless appetite for Chipotle's burritos, appear to be losing it. The company's pace of growth has been steadily decelerating over the last several quarters.

Sales at stores open for more than one year rose 5% during the third quarter. That's down from last quarter's 8% growth and far below a year earlier, when sales were up 11%.

Related: Einhorn: Short Chipotle, go long GM

Until recently, Chipotle had been one of the highest-flying stocks, with its shares doubling over the past five years. This year, its shares are down nearly 28%.

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Maureen Farrell
Maureen Farrell
Staff writer, CNNMoney

Maureen Farrell is a staff writer at CNNMoney and covers Wall Street, banking, mergers and the stock and bond markets. Prior to joining CNNMoney, she covered venture capital and entrepreneurs for Forbes, and mergers and bankruptcy for Mergermarket and Debtwire, both divisions of the Financial Times.

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