Chipotle stock spiked, then quickly backtracked late Wednesday after the fast-casual chain just topped Q2 forecasts.
Chipotle Mexican Grill reported a 25% increase in earnings to 33 cents per share, edging out FactSet expectations of 32 cents per share. Revenue jumped 18.2% to $3 billion. Analysts predicted $2.94 billion in sales.
Chipotle's earnings growth slowed after accelerating over the last two quarters.
Comparable sales rose 11.1% for the quarter, which beat views for 9.2% same store sales growth. The comparable sales growth was driven by an 8.7% transaction growth and a 2.4% increase in average checks.
Chipotle recorded 7% comparable sales growth in Q1, and a 7.4% increase for the second quarter last year.
The company opened 52 new company-operated restaurants during the quarter, of which 46 included a Chipotlane drive through.
Chipotle guided full-year comparable restaurant sales to grow in the mid- to high-single digit range, while FactSet expects 7.4% same-store sales growth for the year.
The food chain plans to open 285 to 315 new restaurants in 2024, with over 80% having a Chipotlane drive-through.
Chipotle Stock
Chipotle stock initially soared more than 10% in Wednesday afterhours session, then quickly pared its gains. In premarket trade on Thursday shares remained about 1.4% higher.
Shares had dropped 1.5% during market hours Wednesday, dipping below their 200-day moving average.
CMG stock has been in a steady downtrend since late June, falling back to its mid-February levels.
The company's board of directors in March approved a 50-for-one stock split, which went into effect on June 26. It marked Chipotle's first stock split in its 30-year history, as well as one of the biggest splits in the history of the New York Stock Exchange. The NYSE's last 50-for-1 stock split was Berkshire Hathaway's all the way back in 2010, MarketWatch reported. Previously, Nasdaq-listed Amazon.com completed a 20-for-1 split on June 6, 2022.
Stock splits spread the market value of a company across a greater number of shares, which results in a lower price point for the stock. The total market capitalization of the company and the stock's chart pattern remain unchanged after a stock split, but liquidity increases due to the issuance of more shares. A lower share price does make it easier to trade options.
Still, Chipotle stock advanced about 13% this year through Wednesday's close.
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