There’s been no shortage of stock splits this year, with heated demand from retail investors for greater accessibility into some of the fast-moving high-flyers. Chipotle Mexican Grill (NASDAQ:CMG | CMG Price Prediction) was one of the red-hot, high-priced stocks that had one of the biggest stock splits I’ve ever seen going into the summer season.
The “growthy” quick-serve restaurant chain saw its shares split by a whopping 50-for-1. Indeed, if there was a stock that was long overdue for a split, it was Chipotle, which ran up well past $3,000 per share prior to its split. Indeed, Chipotle shares didn’t perform all too well after its much-anticipated stock split, which began on June 26, 2024.
In fact, the split preceded a rather nasty sell-off that saw shares of CMG shed close to 28% of their value from peak to trough. Undoubtedly, the stock split likely had absolutely nothing to do with the bearish plunge into the summer season. The stock was overheated and quite expensive at the time, making it long overdue for a correction.
Indeed, CMG shares have spent most of the second half climbing back from its post-split plunge. And while it’s not yet at all-time highs, the recent rally, which kicked off in July, seems worth getting behind going into the new year. If anything, this year’s sell-off sets the stage rather well for Chipotle as it looks to make up for lost time.
Key Points About This Article
- Chipotle can leverage tech and robotics in a way to drive growth even higher.
- Don’t bet against the burrito giant as it inches closer to new all-time highs.
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Chipotle: It’s a robotics play over the long term.
The rise of physical artificial intelligence (AI) or robotics is a key area that could cut down on lines in stores while padding margins. In many ways, Chipotle has been a master of efficiency. While lines at your local Chipotle are likely to be large, I have noticed that the lines move rather quickly at the many locations I’ve personally been to.
In the coming years, I expect the burrito and bowl assembly line to be even speedier as new innovations look to take more friction out. Whether that entails incorporating robots or something else remains to be seen. Either way, I see a long-term opportunity for Chipotle to put its AI hat on as the AI boom looks to go physical in the near future.
Heck, if Tesla (NASDAQ:TSLA) Optimus robots can serve drinks, I see no reason why they can’t help build a burrito as well. Perhaps Tesla’s robots are every bit as impressive as its new electric vehicles, if not more so. Either way, I view Chipotle as having runway to gain once the AI boom eventually works its way into the quick-serve restaurant scene.
Chipotle’s new CEO is serious about growth.
Chipotle’s new CEO (the man who will replace Brian Niccol, who left for Starbucks (NASDAQ:SBUX) earlier this year), Scott Boatwright, is a very capable manager who’s serious about embracing new technologies to improve his firm. However, he’s in no rush to jump on the robotics bandwagon, at least not anytime soon.
Though Boatwright and company will “leverage that automation in the digital system only” for the time being, leaving team members to deal with the “highly customized” burrito line, I think it’s just a matter of time before the robots become good enough to create those “big beautiful burritos and bowls” that meet Mr. Boatwright’s high standards.
As more robotics and other innovations are out to local Chipotles in the coming years and decades, it’s hard not to think CMG stock won’t be able to take its rally into overdrive. Given the catalyst, I view CMG stock as way too cheap at just north of 48 times forward price-to-earnings (P/E) while it’s still down over 6% from its peak.
The bottom line on CMG stock following the year it split and crumbled
Sure, there’s greater uncertainty with a new CEO who has big shoes to fill. However, I do view Boatwright as a great manager in his own right. And with a potential robotics tailwind up ahead, I continue to view Chipotle as one of the high-growth restaurant stocks to own for the long term.
I’m still not used to CMG shares going for less than $65 and change per share. The name has been in the quadruple-digit club for such a long time. In any case, I think now’s a great time for investors to punch their ticket now that you don’t need a few grand to drop on a single share.
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