Chipotle 50-for-1 Stock Split: What You Need to Know
Chipotle's 50-for-1 stock split is now effective, making shares more affordable for investors and employees. Learn what this means for your portfolio.
Chipotle Mexican Grill (CMG) just made a big change by splitting its stock 50-for-1. This is the first time Chipotle has ever split its stock, and it's a major event on the New York Stock Exchange.
Starting today, if you owned Chipotle stock before the market closed on June 18, you now have 50 shares for every one share you previously owned. This means that if you had one share worth $3,283.04 on Tuesday, you now have 50 shares worth about $65.66 each.
Jack Hartung, Chipotle's Chief Financial Officer, said this change is meant to make it easier for more people, including employees, to buy Chipotle stock.
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Before the split, Chipotle's stock was one of the most expensive in the S&P 500, behind only NVR, Inc. (NVR) and Booking Holdings (BKNG). Even after the split, the price per share is still much higher than when Chipotle first sold stock to the public in 2006 at $22 per share.
Analyst Danilo Gargiulo from Bernstein said that the stock split could help Chipotle because it makes the stock more affordable for small investors. However, he also mentioned that this could make the stock's price move up and down more often. He doesn't think Chipotle will become a meme stock like GameStop, but it might see more price changes.
As of Tuesday, Chipotle's stock had gone up 43% this year, compared to a 15% increase for the S&P 500.
Chipotle employees will also benefit from this stock split. Around 4,000 employees, including managers and long-term crew members, will get a special stock grant, which will be given over three years. Employees who have been with Chipotle for at least a year can also join the Employee Stock Purchase Plan (ESPP), allowing them to buy shares at a discount using part of their salary.
Chipotle's stock split is part of a trend among big companies. Nvidia (NVDA) recently did a 10-for-1 stock split, and Walmart did a 3-for-1 split earlier this year. Companies that split their stock usually see good results, with an average return of 25% one year after the split, compared to 12% for the broader market, according to Bank of America.
Overall, Chipotle's stock split is designed to make its shares more affordable and could help the company perform better in the market.
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