Chipotle (CMG) Continues to Get Hammered from E-Coli Outbreaks

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By Jacob Maslow

Burrito chain Chipotle (NYSE:CMG) is in the financial doldrums, with stock plunging after E-Coli outbreaks were linked to its outlets.

Chipotle Mexican Grill, Inc. has seen stock prices dive from $596.83 on December 16th, to the current price of $495.10.

The company has announced that it expects same store sales to fall from between 8%-11% this quarter, which will be the first time in the company’s history. With over 1700 outlets worldwide spanning as far as France, the chain has seen relentless growth in recent years with its stock price almost tripling since 2012.

JPMorgan analyst John Ivankoe has an even gloomier prediction for Chipotle. He predicts that sales will fall for five quarters consecutively, declining all throughout 2016.

So far, 53 people have fallen ill to E-Coli across 9 states, with no less than 47 of them confirming they ate Chipotle before getting ill. Matters were made even worse for Chipotle when a Norovirus outbreak sickened more than 150 customers in a Boston outlet recently.

Management has taken several decisive steps to try to restore both investor and consumer confidence, including moving food preparation to a central kitchen and reducing its dependence on local ingredients. So far, however, the stock remains on a steep downward trend.

Could it be time to go short on Chipotle? John Ivankoe certainly thinks so.

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