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Chipotle plans rare 50-for-1 stock split as share price nears $3,000

¡Qué delicioso! 1 in 10 restaurants in the U.S. serve Mexican food
¡Qué delicioso! 1 in 10 restaurants in the U.S. serve Mexican food 00:21

Chipotle Mexican Grill is planning to lower its stock price and give more shares to its existing investors.

The fast-casual restaurant known for burrito bowls and charging extra for guac said this week it will conduct the company's first ever stock split. The unusual 50-for-1 stock split needs shareholder approval first, which the company said it will seek during its annual meeting in June. And if approved by shareholders, the transaction would be one of the largest stock splits in New York Stock Exchange history, Chipotle said. 

The move will make Chipotle's "stock more accessible to employees, as well as a broader range of investors," a company executive said. 

"This split comes at a time when our stock is experiencing an all-time high driven by record revenues, profits, and growth," Jack Hartung, Chipotle's chief financial and administrative officer, said in a statement. 

Chipotle's share price opened Wednesday at $2,797, up nearly 97% from three years ago when it was $1,421. 

What is a stock split?

A stock split is when a publicly traded company increases the number of its shares available to investors in an effort to entice more people to buy shares in the company. Increasing the number of shares available effectively lowers the price of the stock after a certain date — which then makes purchasing stock more affordable. Companies typically conduct stock splits to quickly infuse the organization with outside cash. 

Stock splits can be structured many ways — including 3-for-1, 10-for-1 or 100-for-1. In Chipotle's case, anyone holding one share as of June 18 will be awarded an additional 49 once the split is official. Chipotle said investors should expect to see their additional shares on June 25.

In short, the rise in Chipotle's shares is the result of the restaurant's opening new locations and growing revenue. The company opened 271 new locations in 2023 and reported $9.9 billion in revenue for the year, a 14.3% increase from 2022. 

In terms of its food offerings, meanwhile, part of Chipotle's recent success is also tied to a new menu item. Truist Securities analysts point to the company's launch of its carne asada dish as driving sales. 

The chain had roughly 3,400 locations as of December and plans to open between 285 and 315  new locations this year. CEO Brian Niccol said last month that Chipotle's long-term goal is to have 7,000 restaurants across North America. 

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