Chipotle: Adjusting Fair Value Estimate to $40 per Share After Stock Split; Shares Remain Overvalued

Effective June 26, wide-moat Chipotle shares have split 50-for-1, one of the largest stock splits in the history of the New York Stock Exchange. Each shareholder of record on June 18, 2024, will receive 49 additional shares for each share held, and the firm will offer a one-time equity grant for both its restaurant general managers and its crew members with more than 20 years of service. Given that we expect a negligible dilutive impact from the latter move, we revise our fair value estimate to $40 per share from $2,050, leaving shares looking expensive on a post-split basis. Our assessment of the firm's intrinsic valuation in dollar terms remains unchanged, with our $40 revised fair value estimate continuing to correspond with an equity fair value just north of $55 billion.