Chipotle Mexican Grill (NYSE: CMG) is making a big change to its stock. On Tuesday, they're doing a 50-for-1 stock split.
This idea, announced back in March, was approved by shareholders at a recent meeting. Since the news, Chipotle's stock has been climbing, although it did have a few dips lately.
Why Split the Stock?
Chipotle's stock has been on the rise since it first went public in 2006, starting at $22 a share. Over the past year, the stock jumped more than 57%, hitting over $2,000 in April 2023. While other fast-food giants have felt the pinch from reduced spending, Chipotle and other fast-casual spots like Sweetgreen have kept their prices steady and avoided cuts.
Chipotle’s CFO, Jack Hartung, explained that the split is meant to make the stock cheaper and more attractive to a wider range of people, especially their own employees. Lowering the share price could bring in more individual investors. Plus, they’re offering a special one-time stock grant to general managers and long-term employees, which shows they want employees to own part of the company.
After the markets close on Tuesday, investors will see their number of shares multiply by 50. For example, a share priced at $3,193.74 before the split will become 50 shares priced at $63.87 each. While the number of shares increases, the total value of investors' holdings and the company's market capitalization will remain the same.
After Monday's trading session, Chipotle shares finished at $3,193.74, down 0.52%. However, the stock has gained nearly 40% since the start of the year, hitting a record high of $3,427.61 last Tuesday before dipping later in the week.
So, the stock split is a strategic move to make its shares more accessible and promote broader ownership among investors and employees. The split will lower the share price without changing the overall value of investments, positioning Chipotle for continued market participation and growth.
