Should You Buy Into Chipotle's 50-for-1 Stock Split? Maybe...

The big news surrounding Chipotle Mexican Grill (NYSE: CMG) lately has been its huge 50-for-1 stock split, which took effect at the opening of trading on June 26. Normally, stock splits are way smaller, like 2-for-1 or 3-for-1, so this one was an interesting development. But investors have to step back and understand what exactly is going on. On one hand, a stock split isn't as important as it sounds, but on the other, it might still be important to Wall Street.

There are different ways that stock splits are managed, but the most basic concept is that the company issues its shareholders a set number of new shares for each share they own. In the case of the popular Mexican fast-casual chain, it was 50 shares for each one. So, if you owned 10 shares before the split, you own 500 shares now. That might sound like an incredible deal, but it really isn't. That's because in every split, the stock price gets adjusted proportionally. Chipotle shares began trading on June 26 at about 2% of the price they closed the session prior.