Chipotle Mexican Grill (NYSE:CMG) completed its 50-for-1 stock split.
The deal brought the stock’s price down from a nosebleed of $3,300 per share to an investor-accessible value in the mid-60s. The market capitalization remains the same, at $4.5 billion.
While the deal has no practical effect, it does have a psychological one: It encourages small investors to purchase CMG stock. It’s one of the biggest splits in the history of the New York Stock Exchange.
Cheers for Niccol
Chipotle, which was originally a 2006 spin-off from McDonald’s (NYSE:MCD), closed on June 25 at $3,283 and opened this morning at $66.35. It rose nearly 3% on the 25th and another 1% overnight.
The company was in deep trouble in the middle of the last decade after a series of scandals related to food handling. But hiring CEO Brian Niccol from YUM! Brands’ (NYSE:YUM) Taco Bell unit in 2018 proved a turning point.
Niccol moved the headquarters from Denver to Newport Beach, added an online rewards program, and extended the business day beyond lunch. He also expanded the menu.
Since Niccol’s hiring, the company’s value has grown more than tenfold. Its cafeteria line with bowls and sandwiches has become a model for companies like Mediterranean food shop CAVA (NASDAQ:CAVA). CAVA stock has more than doubled since its initial public offering (IPO) last year.
Chipotle is working to capitalize on the excitement. It is extending the use of its “Celebrity Card” discount to social media and plans to open about 300 new restaurants this year. Chipotle now owns about 3,500 outlets in the U.S. and Europe. It’s the largest company-owned restaurant chain operating in both markets.
CMG Stock: What Happens Next?
Chipotle proves investors can make big money on stocks outside technology. You just need a good idea and the right leadership. Those who saw Niccol coming are smiling.
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
