RCI Hospitality Holdings Inc (NASDAQ:RICK) shares fell midday Wednesday after short seller Edwin Dorsey brought attention to a destructive fire at a nightclub location. Dorsey previously alleged law enforcement raids at the company's Houston office and a New York location.

What Happened: A fire broke out at RCI's Baby Dolls club in Fort Worth, Texas, according to the Fort Worth Star-Telegram. The building appears to be destroyed or heavily damaged. Dorsey, an author at The Bear Cave, called the company "uninvestable" in a Wednesday afternoon post on X, also echoing his allegations of raids in May.

"How is $RICK up on the day after their Baby Dolls club in Forth Worth, Texas burned down this morning (no casualties)," Dorsey said. Its share price quickly reversed.

In May, Dorsey alleged that RCI Hospitality properties were raided by police in Houston and New York City, citing apparent photo evidence of officers outside locations and anonymous comments on Reddit.

Benzinga has contacted RCI Hospitality for comment on the fire and Dorsey's allegations.

"$RICK is uninvestable because the company still hasn't disclosed why law enforcement raided its headquarters and numerous clubs six weeks ago," Dorsey posted on Wednesday.

The Houston-based company's portfolio includes subsidiaries that own over 60 nightclubs and sports bar restaurants in the United States, according to RCI's website. The company has locations in cities such as New York, Chicago, Dallas, Houston, Miami, Phoenix, Minneapolis, Denver, St. Louis, Charlotte and Pittsburgh.

Why it Matters: A Bear Cave report from 2022 criticized the company's foray into NFTs and possible legal troubles.

In 2022, Benzinga hosted a bear-bull debate including Dorsey and RCI Hospitality CEO Eric Langan discussing the company.

RICK Price Action: RCI Hospitalityopened at $39.20 Wednesday, hitting an intraday high of $39.56 to move the stock into positive territory.

Dorsey published his tweet early in the afternoon. The stock then sunk into the red, trading down over 3% from its high. The stock ultimately closed at $38.52, down 1.81%.

RCI Hospitality shares are trading down over 14% since Dorsey's allegations in May.

Also Read:

• Exclusive: Twitter Spaces 'Bulls vs. Bears' Debate With RCI Hospitality And Edwin Dorsey

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