shares rose 2.8% on Tuesday as the burrito chain prepares for the first stock split since its debut on the New York Stock Exchange nearly two decades ago.
The 50-for-one split will increase the number of shares outstanding by that factor, but the share price will be adjusted to one-50th of its pre-split value as of Tuesday’s close, at $3,283.04. Chipotle’s shares will trade at $65.66 on a post-split basis when the market opens on Wednesday. The value of shareholders’ investments won’t be affected.
Following the stock split, Chipotle shares could become more appetizing to retail investors, who may have had sticker shock before the split. The anticipated boost to demand could even drive the stock price up in the near term.
Chipotle also announced a special equity grant for longstanding restaurant managers and crew members, a move that would incentivize and retain employees.
Chipotle’s stock has been on the rise for months, bolstered by strong same-store sales and ongoing expansion efforts. The burrito chain’s customer base has higher average income than its fast-food rivals, and has therefore been less affected by inflation over the past two years.
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Despite recent controversies surrounding portion sizes at its restaurants, which the company has refuted, investor confidence remains robust.
Following the announcement of the stock split on March 19, Chipotle stock soared to a record high last Tuesday before settling. Analysts anticipate further gains post-split, given the current bullish sentiment in the market.
This year has already seen a few major stock splits as the market rally pushed some stocks to historically high prices, including
and chip maker
Nvidia
.
and
have also announced plans for stock splits later this year. Looking ahead, other high-price stocks, such as
NVR
,
AutoZone
,
and
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could also be candidates for similar actions.
As far as Chipotle is concerned, the next major event is July 24 when it reports second-quarter earnings.
Write to Evie Liu at evie.liu@barrons.com
