Chipotle’s (NYSE:CMG) 50-for-1 stock split, one of the largest in the New York Stock Exchange’s history, is just around the corner. Participating shareholders of record on June 18 have already been locked into the split, and those investors will see the stock split reflected at the close of trading on June 25. The shares will officially begin trading at the split-adjusted level on June 26.
The Huge CMG Stock Split Was Approved by Shareholders
CMG stock is up 43% year-to-date and has gained a whopping 343% in the past five years. The price of an individual share currently sits at about $3,215, which can make it difficult for retail investors to buy into the company.
Chipotle’s shareholders approved the stock split on June 6. The restaurant chain said that the change would make its shares “more accessible” to its employees and “a broader range of investors.” The firm indicated that it plans to provide its employees with more shares of CMG in the wake of the split than it has in the past.
Controversy Over Chipotle’s Portion Sizes
Discussions about Chipotle’s portion sizes trended on social media for “a brief time,” Seeking Alpha reported on June 18. The controversy was sparked partly by food critic Keith Lee, who said last month that he was not receiving as much chicken at the chain. Lee also sharply lowered his rating on the firm’s steak quesadilla to 2.5 from 10, saying that “something changed, and I don’t know what it is.”
However, according to Restaurant Insight Monitor, more consumers say they plan to visit Chipotle going forward than previously, Seeking Alpha reported. Investment bank Evercore ISI stated that more low-income and young consumers chose Chipotle in April and May instead of cheaper fast-food options.
Meanwhile, on June 13, Goldman Sachs named CMG stock as one of its six top picks in the restaurant sector. But on the other hand, the shares did sink 7% between June 18 and the market close on June 20.
The decline may indicate that some investors fear that complaints about the company’s portion sizes could hurt it in the longer term.
On the date of publication, Larry Ramer 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.
