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Key takeaways
Chipotle stock is expected to split 50-to-1 after markets close Tuesday, with shareholders receiving an additional 49 shares for every share they previously owned.
Chipotle’s first adjusted trading day will be Wednesday.
The split will reduce the cost of each individual share and could make the stock more accessible to Chipotle employees and a wider range of investors.
Chipotle Mexican Grill (GCM) Investors will soon see a much larger number of stocks in their portfolios after Chipotle stock underwent a 50-for-1 split after markets closed Tuesday, with investors gaining 49 new shares for every one they they owned before the split.
The fast-casual chain announced plans for a 50-for-1 stock split in March, and the move was approved by shareholders at its annual meeting earlier this month. Shares rose after the initial announcement and have largely rallied since, although they refused at the end of last week and until Monday morning.
Why Chipotle is splitting its stock
Chipotle shares have climbed steadily since the company’s IPO in 2006, with a initial public offering (IPO) price of $22 per share. Shares are up more than 57% over the past year after first closing above the $2,000 mark in April 2023.
Recently, the company has managed to continue reporting solid profits despite a broader withdrawal of discretionary spending which was felt by other fast food giants like McDonald’s (MCD). However, fast casual chains like Chipotle and Sweetgreen (SG) were able to resist the downward trend in prices.
When the split was announced in March, Chipotle Chief Financial Officer Jack Hartung said the company wanted to make its shares more accessible to a wider range of investors, particularly Chipotle employees, by trading them at a Lower price. The chain also announced that it plans to offer a unique special offer stock grant, a type of stock compensationto general managers and employees with more than 20 years of experience at Chipotle to promote employee ownership of stock.
How the split will work
The new shares will be distributed after markets close on Tuesday, resulting in 50 times more shares at a lower price per share, without changing the total value of investors’ Chipotle holdings or the company’s market capitalization.
For example, if Chipotle stock was trading at $3,194.50 before the split, an investor holding one stock before the split would own 50 shares priced at $63.89 each after the split. Chipotle’s first adjusted trading day will be Wednesday.
Chipotle’s stock split also comes just weeks after tech giant and artificial intelligence (AI) darling Nvidia (NVDA) carried out its own stock split to a 10:1 ratio earlier this month. Nvidia Stock pink following the split, briefly making Nvidia the the most valuable company in the world by market capitalization, but they refused at the end of last week and until Monday.
Chipotle shares were down 0.7% at $3,194.50 as of 2:30 p.m. ET Monday, although they have gained nearly 40% year to date, and closed at a record high of $3,427.61 last Tuesday, before dropping later in the week.
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