Chipotle's 50-for-1 Stock Split Is Coming. Here's What Investors Need to Know
What is a forward stock split?
A forward stock split is when a company increases the number of its outstanding shares, resulting in more shares for existing shareholders without any change in the company's overall value. This is done to make the stock more affordable for investors and increase the liquidity of the shares.
How has Chipotle's revenue growth compared to McDonald's since 2020?
Chipotle has consistently outperformed McDonald's in terms of revenue growth since 2020. Despite the pandemic, Chipotle managed to grow its revenue by more than 7% in 2020, while McDonald's revenue shrank by more than 10%. This trend continued in 2023, with Chipotle reporting a 14.3% increase in revenue, driven by an 8.4% increase in comparable restaurant sales. In contrast, McDonald's revenue fell by under 1% year over year in the same period1.
How might lowering stock prices affect retail investor participation?
Lowering stock prices through stock splits can make shares more accessible and attractive to retail investors, as it reduces the barrier to entry and allows for increased affordability. This can potentially lead to higher retail investor participation and trading volumes, positively impacting stock prices in the short term. However, long-term performance still depends on the company's fundamentals and growth prospects.