The Impact of Chipotle Mexican Grill’s Stock Split on Future Growth

Key Takeaways

• Chipotle Mexican Grill completed its stock split after markets closed Tuesday, with the stock trading at its new price Wednesday.
• The chain now looks forward to its next earnings report next month, and its long-term plans of continuing to expand and open new locations.
• Chipotle and other fast-casual restaurants like Sweetgreen have managed to weather the broader pullback in discretionary spending in recent quarters.

Chipotle Mexican Grill (CMG) has completed its 50-for-1 stock split, and started trading on a split-adjusted basis Wednesday as the restaurant chain looks forward to its earnings next month and its long-term plans to continue opening new locations.

Shares were little changed Wednesday, but stocks that undergo stock splits often see increased trading activity, “gaining 25% one year later vs. 12% for the broad index,” according to Bank of America analysts.

Chipotle Shifts Focus To Earnings, Future Plans

“Today we celebrate the remarkable achievements of our employees by increasing ownership accessibility for team members and new investors,” Chipotle Chief Executive Officer (CEO) Brian Niccol said Wednesday.

Company leadership said when it announced the split earlier this year that the primary motivation was to make its stock price more accessible, especially among employees. Chipotle also said it planned to reward long-time employees by offering a special one-time equity grant for restaurant general managers and employees with more than 20 years of service.

The company will report second-quarter results after the bell July 24. In April, it reported bigger-than-expected first-quarter revenue and profit.

Chipotle Has Posted Strong Earnings Despite Discretionary Spending Pullback

Chipotle and other fast-casual chains like Sweetgreen (SG) have managed to continue posting strong earnings despite a pullback from consumers on discretionary spending that companies like McDonald’s (MCD) have acknowledged in recent months.

Wedbush analysts wrote in a recent note that Chipotle is “poised to sustain accelerated market share gains” going forward, and said a recent event with company leadership made them “incrementally more confident” that the chain’s drivers of market share gains remain intact and it can continue improving margins.

In its latest earnings report, Chipotle said it expects comparable restaurant sales to grow in the mid- to high-single-digit percentage range for fiscal 2024, and said it plans to open between 285 and 315 new locations over the fiscal year.

Chipotle shares edged 0.4% higher to $65.93 by 12:20 p.m. ET Wednesday.

Overall, Chipotle Mexican Grill’s recent stock split has set the stage for future growth and expansion as the company continues to navigate through changing consumer trends and economic conditions. With a focus on earnings and long-term plans, Chipotle remains a strong player in the fast-casual dining industry.

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