Business

Chipotle Stock Surges After 50-for-1 Split

Shares of Chipotle Mexican Grill are up 0.9% premarket Wednesday after the burrito chain’s first stock split since its debut on the New York Stock Exchange nearly two decades ago.

The 50-for-one split increased the number of shares outstanding by that factor, but the stock price was adjusted to one 50th of its pre-split value at Tuesday’s close, to $3,283.04 . Chipotle shares will trade at $65.66 after the split when the market opens Wednesday. The value of shareholders’ investments will not be affected.

After the stock split, Chipotle shares could become more attractive to retail investors, who may have been shocked by the stock’s price before the split. The expected increase in demand could even push the stock price higher in the short term.

Chipotle also announced a special stock grant for longtime restaurant managers and crew members, a move that would encourage and retain employees.

Chipotle’s stock has been rising for months, buoyed by strong same-store sales and continued expansion efforts. The burrito chain’s customer base has a higher average income than its fast-food competitors 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 strong.

After the stock split was announced on March 19, Chipotle stock hit a record high last Tuesday before stabilizing. Analysts anticipate further gains after the split, given the current bullish market sentiment.

This year has already seen some major stock splits, with the market rally pushing some stocks to historically high prices, including Walmart and chipmaker Nvidia.
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Search Lam
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Williams-Sonoma
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and Broadcom also announced plans for stock splits later this year. Looking ahead, other high-priced stocks, such as NVR
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Reservation of funds
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Automatic zone
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and the handsome Isaac
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could also be candidates for similar actions.

As for Chipotle, the next major event will be July 24, when it reports its second-quarter results.

Write to Evie Liu at evie.liu@barrons.com

News Source : www.barrons.com
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