Chipotle Mexican Grill's 50-to-1 stock split last June reduced its share price dramatically but did not enhance its market valuation, with the stock losing over a quarter of its value shortly thereafter. Despite this decline, productivity and sales remain strong, with analysts anticipating a 13% revenue increase and earnings growth in the upcoming Q4 report. The restaurant chain continues to explore expansion opportunities, highlighting the resilience of its customer base even amid fluctuating stock prices.
Splits, of course, are meaningless to the value and operations of the business. Everything is the same pre-split and post-split except now the stock is cheaper and there are more shares trading.
After the stock split, Chipotle’s value dropped significantly, losing over a quarter of its value immediately following the decision, although it has since rebounded somewhat.
Chipotle has numerous growth levers it can pull to justify its lofty valuation, including opening new restaurants and expanding overseas.
Management doesn't provide guidance, but indicated that it expects full-year comparable store sales to be up in the mid- to high-single-digit range.
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