Chipotle Mexican Grill Inc. (CMG, Financial) has announced a proposal for a 50-to-1 stock split, aiming to expand its investor base following a remarkable 13,000% increase in its stock value since the initial public offering. This move is designed to attract more investors by making shares more affordable.
The proposed stock split, a first in the company's 30-year history, is set to be one of the largest in New York Stock Exchange history. Chipotle, which debuted on the stock market in January 2006 at $22 a share, now boasts a trading price of around $3,000, ranking it among the highest on the S&P 500 Index.
Following the announcement, Chipotle shares saw an 8% increase, reaching $3,019.97. This uptick is part of a 30% rise in 2024, adding to the previous year's 65% gain. The stock split is pending shareholder approval at the June 6 annual meeting, with split shares expected to begin trading on June 26.
Chipotle's CFO, Jack Hartung, stated that the split aims to make the stock more accessible, particularly to employees and a wider range of investors. Analysts view the split as a positive move that could enhance trading liquidity without altering the company's economic value.
In addition to the stock split, Chipotle plans to award a one-time equity grant to long-serving general managers and crew members, signaling confidence in the business's fundamentals. The company attributes its stock performance to record revenues, profits, and growth, with recent quarterly results surpassing expectations.
While stock splits have become less common in recent years, Chipotle's decision follows a few other S&P 500 companies that have executed stock splits since the end of 2022, including Walmart Inc. and Cooper Cos.
