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03/22/2024 |

Chipotle’s 50-for-1 Stock Split, Explained

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Understanding Stock Splits

A stock split is a corporate action where a company increases its number of outstanding shares, thereby reducing the price per share while maintaining the overall value of shareholders’ holdings. Chipotle’s board has approved a significant 50-for-1 stock split, aiming to make its stock more accessible to a broader range of investors.

Rarity Of Large Stock Splits

While stock splits are common, particularly with ratios like 2-for-1 or 3-for-1, Chipotle’s proposed 50-for-1 split is exceedingly rare in U.S. stock history. Such large splits are uncommon for thriving companies like Chipotle, highlighting the unique nature of this move within the market.

Reasons Behind Chipotle’s Decision

Similar to Walmart’s stock split earlier this year, Chipotle’s decision to initiate this stock split stems from a desire to increase accessibility and attract a wider pool of investors. As the company experiences record revenues, profits, and growth, it believes that a lower share price would encourage more participation in its stock. Following board approval, shareholders will vote on the split in June, with potential distribution of additional shares expected thereafter.