Short-term bullish on CMG due to merger speculation setting a price floor at 31.62 and implying a target of 46.

Well, a ridiculous idea has made headlines, with the Financial Times front page suggesting that Starbucks is now considering acquiring Chipotle. This is perhaps one of the most foolish forms of despair I can imagine, but I say if it happens, it is likely to be very and quickly useful to one of these two stocks.

Chipotle is not a cheap company at all. Now, its stock has fallen considerably since its peak growth phase in 2024 with the arrival of Chipotle Trails , and you have this insane expansion in the works.

I love Chipotle. I think they have a great product. I think they are very good overall. But their rating has collapsed by about 60%, which is extremely low. I mean, this company went from a value of nearly one hundred billion dollars to about 42 billion dollars.

Good. This is the Starbucks situation. Now, if we look at Chipotle, the numbers here are at least better. Good? We still have growth. Growth of 9.3%. However, total operating expenses increased by 12.7%. So Chipotle's net income is actually declining.

Chipotle has almost reached its peak growth as the markets have become saturated with its restaurants. It's everywhere.

For example, I really don't think we'll ever see Chipotle queues at Starbucks. I mean, maybe you can see some Starbucks-branded drip coffee in Chipotle. It might not be a bad idea if they could sell you drip coffee with a high profit margin for $5, but I don't think you'll be getting your own gourmet latte at Chipotle anytime soon.

If that happens, it is a more pessimistic sign for this company that is likely to be merged. Because it's very complicated when you start adding different lines of work for people who work for minimum wage and are really good at doing one thing.

Like putting rice on a burrito. Put the beans on it. You now want to train a rice and bean person to make you a fancy latte. It's not going to work that easily, okay? A different kind of person, a different mentality, everything is different here.

However, I think it could be positive for Chipotle stock. The reason I believe it might be positive for Chipotle stock is that to convince shareholders to do something as ridiculous as merging Chipotle and Starbucks, you would have to pay a tempting premium for Chipotle.

Therefore, in the short term, this deal has set a technical floor for Chipotle stock and has upside potential beyond that. For example, if I take a quick look, I'm trying to find a good technical point.

I am finding it very difficult to draw... Let's draw a small gray line here. I got...this on the weekly timeframe here. I have a summit here. This is at a level of 31.62, which is roughly where we stand now.

I have a summit, I have a summit, I have a summit here. We're playing with the numbers here and you can see that it's almost a minimum. Isn't that so? Minimum, minimum, it's chaotic.

It's a small, messy gray line here , but I think this deal is setting a floor at 31.62 for this stock right now until the deal fails because it's a very stupid idea.

But, if the deal goes through, I actually think it will most likely be at a price closer to $46. There are no guarantees, of course, and this is not personal financial advice , but I believe that in order for Chipotle shareholders to agree to this, they need compensation of $46 per share.

That would be my guess. That would represent a premium of approximately 43%.

Now, Starbucks will have to borrow a lot of debt to do this because they are bankrupt. Therefore, they will have to sell shares and issue debt. So, pessimistic about Starbucks , optimistic about Chipotle, and pessimistic about the whole thing combined.

Now, the CEO of Starbucks, and here's where it gets interesting, is actually the former CEO of Chipotle. So, it seems he misses Chipotle so much that he wants to do something incredible after their failure in China, which he was hired for, you know, to help get them out of.

He needs to try to do something and I think he's bored, so they think this is a good idea in a way . Let's just take over the company I used to work for .