Hollis Johnson/Business Insider
- Chipotle shares slumped more than 6% Thursday after the company revealed it received a subpoena related to an illness outbreak at an Ohio restaurant.
- Business Insider previous broke the story of the store's closure in April, 2018.
- Chipotle reported first-quarter earnings on Wednesday evening.
- Watch Chipotle trade live.
Chipotle shares plunged more than 6% Thursday after the company said it received a subpoena related to an illness outbreak at one of its restaurants in 2018.
The subpoena was the latest in a series that were issued in conjunction with an investigation by the US Attorney's office in California. The new subpoena included the Powell, Ohio store. Previously, information on several other stores had been requested by the US Attorney's office.
Business Insider previously broke news of the Ohio store's temporary closure in 2018 after more than 100 people fell sick. In 2015 and 2016, over 55 people suffered food poisoning due to two separate E. coli outbreaks.
While Chipotle shares suffered a dramatic fall in connection with the incidents, the company has staged a remarkable turnaround under CEO Brian Niccol, who joined the company in February 2018. Shares are up more than 150% since Niccol took over leadership of the burrito chain.
Chipotle reported strong earnings on Thursday, with the company achieving its fifth straight quarter of accelerating same-store sales. In addition, the company launched new initiatives in mobile ordering and digital technology, a rewards program, and new menu items such as the quesadilla.
The company is one of the most heavily shorted stocks according to Ihor Dusaniwsky, managing director of predictive analytics at the financial-analytics firm S3 Partners. But the shorts have cut their exposure in the face of tremendous losses.
"Chipotle short sellers were selling into the rally for the first 2 1/2 months of 2019, incurring $500 million of mark-to-market losses, -36.51%, before reversing course and cutting their CMG exposure," said Dusaniwsky in a research note.
Despite today's Thursday's drop, Chipotle is up 54% this year.
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