The latest Twitter problems for Chipotle highlight the risk social media can pose for companies. It all started late last week when "Jason Bourne" author Eric Van Lustbader Tweeted that his editor was hospitalized after eating at a Chipotle in Manhattan. It read: "This Chipotle thing is still ongoing. My editor ended up in urgent care after being deathly ill all night from eating at Chipotle's."
Chipotles stock dipped by as much as 3.4% Thursday following the accusation-showing the fragility of street stock prices.
"That's reality for what social media can do: dramatically inflame [prices] in a positive or negative way depending on the situation," Telsey Advisory Group restaurant analyst Bob Derrington said.
But this kind of bad publicity can be overcome. Despite Chipotle's yearlong struggle with food safety, Derrington said he expects the company to recover in the next 12 months.
"As the company distances itself from its previous foodborne illness incidents, the likelihood is that its business will slowly recover, though likely to not to be as strong as its pre-outbreak sales levels. " Derrington said.
Other Wall Street analysts are also positive on Chipotle's future. SunTrust Robinson Humphrey maintains a buy rating and $550/share price target for the fast food chain.
"I'm more optimistic than some. I think the loyalty program and the chorizo launch are potential catalysts," SunTrust research analyst Jake Bartlett said.
Bartlett also mentioned that other fast food chains, Jack in the Box and Yum Brands' Taco Bell, had similar food incidents in the past and bounced back.
Bartlett said he expects Chipotle to recover similarly to how Jack in the Box and Taco Bell did, "typically in the 4th or 5th quarter following the incident."
However, Bartlett mentions that the digital age poses an added risk. "This is potentially deeper because of social media, the drop is steeper."