Chipotle Mexican Grill, Inc. (NYSE: CMG) has announced the launch of a new venture fund, Cultivate Next.
The new fund will provide funding to strategically aligned companies in the “Seed to Series B” stages.
With an initial corpus of $50 million, Cultivate Next is aimed at furthering the company’s strategic priorities of running great restaurants and bolstering the use of technology and innovation to ensure easy access and convenience for consumers.
Following the news, shares of the restaurant chain operator rose 2.7% on Tuesday. However, the stock pared its gains slightly to close at $1,625.05 in the extended trading session.
Management Commentary
The Chief Technology Officer at Chipotle, Curt Garner, said, “We are exploring investments in emerging innovation that will enhance our employee and guest experience, and quite possibly revolutionize the restaurant industry. Investing in forward-thinking ventures that are looking to drive meaningful change at scale will help accelerate Chipotle’s aggressive growth plans.”
Stock Rating
Recently, KeyBanc analyst Eric Gonzalez reiterated a Buy rating on the stock with a price target of $1,900, which implies upside potential of 16.4% from current levels.
According to the analyst, the stock’s present value offers a great entry point for investors.
The Wall Street community is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 17 Buys and three Holds. CMG’s average price target of $1,947.70 implies that the stock has upside potential of 19.3% from current levels. Shares have gained 6.5% over the past year.
Website Traffic
TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Chipotle’s performance this quarter.
According to the tool, the Chipotle website recorded a 31.86% monthly rise in global visits in March, compared to February. Moreover, the footfall on the company’s website has grown 112.88% year-to-date, compared to the previous year.
Conclusion
Chipotle’s move to establish a new venture fund to invest in companies that make strategic sense is expected to be beneficial. Further, the company’s technological innovation capabilities stand it in good stead.
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