Chipotle ( CMG ) investors will notice a shift in their portfolios today.
The burrito giant conducted a 50-for-1 stock split, the company’s first ever split and one of the largest in New York Stock Exchange history.
Chipotle CFO Jack Hartung told investors he believes this will make the stock more “accessible to our employees as well as a broader range of investors” on a call after the company’s first-quarter results.
Shareholders who owned the stock as of the close of the market on June 18 received an additional 49 shares for each. When the market opened on Wednesday, the stock began trading on a post-split basis, meaning that a share worth $3,283.04 as of Tuesday’s close is now trading 50 shares worth about $65 a share on the stock market. open.
Shares were up slightly in midday trading.
Before the split, Chipotle’s stock was the third-highest priced in the S&P 500 (^GSPC), behind NVR, Inc. (NVR) and Booking Holdings (BKNG). Its stock price after the split is still higher than when the company went public in 2006 at $22 a share.
Bernstein analyst Danilo Gargiulo told Yahoo Finance that Chipotle could benefit from the split.
On the one hand, this new entry point allows “more access to retail investors” who may have been put off by the high price before the split, Gargiulo said. But on the other hand, “the stock could be a little more exposed to some level of volatility,” he warned.
“I don’t think it’s ever going to be a meme stock, like GameStop ( GME ) or others in the past, but I think it exposes a little bit more volatility,” Gargiulo added.
In a note to clients after the split, TD Cowen analyst Andrew Charles said the firm believes Chipotle is “well positioned to deliver mid-single-digit same-store sales annually over the medium term,” driven by the approach of its versatile, Chipotlane drive-through. innovation and consumer interest in ingredient transparency. Charles now has a $72 price target on the stock.
As of Tuesday’s market close, Chipotle shares were up 43% year-to-date on a strong sales stretch, compared with a nearly 15% gain by the S&P 500. Shares of rival food chains fast McDonald’s (MCD) and Restaurants Brands (QSR) are down 13% and 11% respectively, while each battle traffic challenges.
Yum! Brands ( YUM ) — owner of Taco Bell, KFC and Pizza Hut — is up slightly for the year.
Some Chipotle employees will reap the benefits of the severance.
Approximately 4,000 Chipotle employees, including restaurant general managers and crew members with more than 20 years of service, will receive a special one-time equity grant to commemorate the stock split, a Chipotle spokesperson told Yahoo Finance .
The grant will be awarded for three years. In addition, US employees who have been with the company for a year can enroll in the Employee Stock Purchase Plan (ESPP), which allows them to buy stock at a discount. They can also choose to use between 1% and 15% of their compensation to help buy back stock.
And Chipotle isn’t the only company doing a stock split this year.
As Yahoo Finance’s Seana Smith reported after Nvidia’s (NVDA) 10-for-1 stock split earlier this month, stock splits are typically bullish for the companies that do them, with average returns a year later of 25% versus about 12% for the wider market. , according to analysis by Bank of America.
Walmart ( WMT ) also recently conducted a 3-for-1 stock split. Since the stock split took effect on Monday, February 26, shares of the world’s largest retailer have risen nearly 13%.
Brooke DiPalma is a senior reporter for Yahoo Finance. Follow him on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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