Shares of Chipotle Mexican grill (CMG) are trading lower again this morning as this beleaguered stock tests important support levels which will determine the future direction of shares. Looking back at the price appreciation since 2009 CMG has been one of the markets best performers. Shares were trading $50 in 2009 and rose to $750 in this 7 year run. Today retesting the $438 level is a critical retest in the eyes of all market watchers. Several store closings, weaker revenue numbers and the recent Grand Jury inquiry tests the nerve of any portfolio manager seeking value in this restaurant sector darling. Many got paid being long Chipotle, now the trade will sort itself out trying to determine if this is a value at the current support level ($438) or if leadership will change hands.
Chipotle says it has been served with a federal grand jury subpoena as part of a criminal investigation tied to a norovirus outbreak this summer at one of its restaurants in California. The investigation is being conducted by the U.S. Attorney's Office for the Central District of California in conjunction with the Food and Drug Administration, the company said in a filing with the Securities and Exchange Commission Wednesday.
Chipotle Mexican Grill says the subpoena requires it to produce a "broad range" of documents. The Denver company has been reeling since an E. coli outbreak linked to its restaurants, which was followed up by a separate norovirus outbreak in Boston. Chipotle says it expects sales for the fourth quarter to be down 14.6 percent.
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