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(Reuters) – Chipotle Mexican Grill shares topped the $3,000 mark for the first time in history, after the burrito chain’s board on Wednesday approved a 50-for-1 stock split aimed at undervaluing the stock. , up more than 7%. potential investors.
The California-based company’s stock has soared to record levels over the past year, driven by strong earnings from solid demand for burritos and rice bowls among its relatively affluent customer base.
A stock split lowers the price of the stock without affecting the company’s valuation, making it more affordable for individual investors.
Based on Tuesday’s closing price of $2,797.56, the company’s stock would trade for about $56 after the split. Chipotle has approximately 27.4 million shares outstanding.
If the split is approved at the company’s annual general meeting on June 6, shareholders will receive an additional 49 shares for each share they own.
As of Tuesday’s close, Chipotle’s per-share value was the fourth-highest in the S&P 500 index. The market value was $76.71 billion.
Chipotle Chief Financial and Administrative Officer Jack Hartung said Tuesday that the split is the first in the company’s 30-year history and will give “more access to our stock to a broader range of investors, not just our employees.” It will be easier,” he said.
“Given the stock’s rise over the past few years, Chipotle’s stock split should ease stock liquidity,” said Jim Sanderson, an analyst at North Coast Research. “Otherwise, the economics of the business are It remains attractive.”
The fast-casual Mexican chain went public in January 2006 at $22 per share.
The company’s forward price/earnings ratio (P/E), a common metric for stock valuation, is 49.72 times, compared with 20.89 times and 22.24 times for peers such as Starbucks and McDonald’s, respectively.
(Reporting by Sabata Mishra in Bengaluru; Editing by Tasim Zahid)
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