“Just last week, I was explaining to one individual that she should be adding Apple (AAPL) to her portfolio. She asked, ‘What is the price at currently?’ When I stated that it was around $300, her reaction was ‘Wow, that is expensive.’ The thing is, she has never done any research in regards to AAPL and just because the price of the stock is high, it does not indicate that the stock is overvalued,” Anderson writes. “Just taking the price of a stock has no relevancy to the actual value, I explained. Now, she is a very intelligent individual, with a PhD, but I believe that many investors have this misconception of a ‘high priced’ stock. Depending on the company, market, and situation, a stock split can be very beneficial to shareholders and thus the company.”
Anderson writes, “The fact that Apple has a forward P/E of less than 20 based on 2011 full year earnings is astonishing. For Microsoft (MSFT), it may make sense, but Apple consistently outperforms and as large as the company is, it continues growing significantly as well… What is amazing is that Apple has beaten estimates for 31 straight quarters and in most cases of those quarters, it has done so easily. The last 31 quarters takes us all the way back to April 16, 2003. Do you really think anything is going to change all of sudden? While it may be possible, it is extremely doubtful.”
Read more in the full article here.
MacDailyNews Take: How does making the price more comfortable for less-savvy (and therefore much more fickle) investors help Apple Inc. in the long run? After all, it’s not like they’re under-financed and in need of operating cash.
For those who see the share price as daunting, but still want to get in on Apple: Establish a brokerage account that allows you to buy partial shares and have at it.
[Thanks to MacDailyNews Reader “GetMeOnTop” for the heads up.]
Stock splits don’t add any real value, they just dilute the shares and allow for more volatility. Share holders would be better off with a cash dividend that they could walk away with or reinvest back into Apple shares.
No split, No dividend, No thanks.
There’s no way I can top nor add more value to what MDN has stated on their take, therefore, I’ll refrain from making a comment.
Or wait…
@Sarasota – Volatility is what the stock manipulators and “pump and dump” artists thrive on. That’s free market stuff, right? Selling short to take advantage of movement in the price of stocks you don’t actually own is the Wall Street way, isn’t it?
Why does this issue keep popping up? Correct me if I’m wrong but didn’t Steve Jobs address this a few years ago at a share holder meeting? He claimed companies like Berkshire Hathaway were less volatile and more prestigious with higher stock prices. He seemed very envious of a $100,000 per share stock price.
No. Next question.
“For those who see the share price as daunting, but still want to get in on Apple: Establish a brokerage account that allows you to buy partial shares and have at it.”
Thank you, ShareBuilder. That’s exactly what I do.
Damn Rat Bastard manipulators would love this.
Who suggested this?.
No! No! No! A thousand times, NO!
This is the stupidest thing I hear, and the people that are saying this (I am looking at you anal-ists) have no idea how Apple operates.
My question is, what good will a stock split do for Apple? Sure, it will add more stock to be bought, and add more revenue, and allow the small person to buy, but, is that what Apple really wants/needs? When you allow more small time traders in, it makes your stock subject to more volatility, allowing a scare of one short term investor to scare another, and essentially cause a massive wave of sell-offs. The longer term investor, the ones that hold on to stock in good times and bad, are the ones Apple wants, and are the ones that will not sell so easily. This aside, why does Apple need to raise more revenue? What does Apple need the influx of new cash for that their $60+ billion cannot accomplish? If Apple really has something that they need that cash for, by all means, do the stock split, but if not, I think it is in the best interest of the company to keep shares high. Actually, I might be convinced for a stock buy-back so that Apple retains more shares, and essentially becomes more private again.
My final thought is that I think Apple likes having a high stock price, it shows that they are a “premium” company. Just like their products, there is a lot of premium value in their stock, and i think Apple has worked hard for this image.
Stock splits, let alone a 10:1, is a dumb idea that needs to go away.
“Now, she is a very intelligent individual, with a PhD”
A PhD in the romance languages does not make her intelligent. It just makes her a cunning linguist.
@ajdowntown
If you really think about it those “anal-ysts” know exactly how Apple operates. Some of them really do have no common sense but I’d say a good 90% of them play the market and have Apple in their portfolio. So lets set a little rumor, let it grow some roots…. then the tree of lies starts to grow.. then it gets to full capacity and starts to grow fruit. that fruit being Apple shares dropping or rising.. whichever the analyst is trying to accomplish to make money
@ Big Al:
Touché
Each year is Apple year since 2001
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People who keeps waiting just gets less % return but it is still not too 2 late to make $$$$!!!
If my calculation of $100/yr increase continues towards 2015 then next year 2011 is $422 and then 2015 = $828 bucks!
That’s 155% increase MacHeads
Buy!AAPL! Split or not who cares! AAPL will go Higher!
The author is correct in my opinion. The high price does keep a lot of real investors away. It does not affect institutional investors or short sellers, but more the mom and pop investors who are now staying away from the market in droves. In a bullish economy the $325 price might not be an impediment, but we are in a very timid market now with personal investors very cautious. I believe a split would cause some excitement and attract this type of investor.
The split would not be done to benefit Apple, to the MDN comment. It would be done to benefit the shareholder. It is much preferred over a stock buyback, which requires the use of company capital, as does the payment of dividends. A stock split does not cost anything, but would possibly help the shareholders. Why do you all think stocks have historically done splits as a matter of course during bull markets?
If Google stock can sit at $600 then why is it necessary for Apple to split? Are pundits constantly asking for Google to split it’s stock? It sure seems as though investors are buying Google stock at its current price. Is Google deemed a more valuable company than Apple? I’d just like to see Apple make some profitable major acquisition with that cash reserve and that might make potential investors a little more interested.
Apple shares have stagnated for a couple of months despite high iPad sales while Amazon continues to rise on its Kindle sales. If Apple had acquired Netflix earlier in the year, Apple might have been at $375 by now. Now Netflix is a missed boat. I just would like to see Apple do something useful with that reserve cash to keep the pundits quiet.
No to a stock split and, as we’re on the subject, no to dividends.
The only reason Apple would need to consider a stock split would be to make a cash-call/rights issue more affordable for individual investors: but Apple doesn’t need to make a cash call given that it has a cash and short-term investments that are worth more than many of the companies that operate in its orbit.
So the only reason to execute a split is to increase the liquidity of the market in AAPL, which presumably would be attractive to Wall St. types so they get a commission on the sale and on the purchase. Now, without any disrespect intended, Apple doesn’t exist to help stockbrokers make money – I don’t remember brokers doing anything substantive to help the company when it was in the doldrums.
As for dividends, what’s the point? Even if Apple gave away 30% of its annual profits via dividends, you may have to own 100 shares to fuel the purchase of a single additional shares. And if you’re already holding onto an investment that’s worth $30K+, you’ll probably make a decision made on the fundamentals of the company, not whether you can afford another $1K or $10K.
The question you need to ask is why are people trying to fix something which patently isn’t broken? There are very few reasons that normally spring to mind, but the one which normally lies at the bottom is blatant self-interest.
No.. ‘unsplit’ instead
“A PhD in the romance languages does not make her intelligent. It just makes her a cunning linguist.”
Now why bring a sex act into the conversation?…
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I want a split, a reverse split, 1:10. Make the shares more expensive, so the whiners will whine even more.
I believe that Google has a stated policy that it will never split its stock. It also does not publish revenue/profit projections.
If Apple were to pay a small cash dividend, it would open it up to investment by institutions which have a policy that have a policy which requires that the managers only purchase shares of companies that pay dividends.
Only reason for a stock split would be if Apple aspires to be in the DJIA. Since it is a price weighted index, committee would never add Apple which would have about 4X the impact on the index movement of XOM and about 12X the movement of T and MSFT.
Believe it would have to do a 4 to 1 to get in range.
Netflix seems too expensive. For $12 billion it could buy a lot of content. Don’t think Apple would like the DVD/physical delivery part of the business. A lot of the 150,000 inventory of NFLX is of little value/not current IMO.
A non-story by a total amateur.
Not this cr@p again.
@dd
Avoid Sharebuilder. You’re better off saving enough money for 2-4 shares and buying them through etrade than using Sharebuilder.
here’s why:
Lets say you pay 75$/mo for 1/4th of a share. After 4 months you’ve got one share @ $300, but you’ve paid a $4 commission each month. So now that stock has to go up $16 just for you to break even on your commissions.
Buy 2-4 shares at etrade, the commission is $9 split by 4, thats roughly $2.25 in commissions per share. The stock only has to go up $2.25 for you to recoup your money.
In short, the more shares you can buy at one time, the better to split the commission over several shares. While Sharebuilder looks like a great deal for investors that have little up front money, it really isn’t a great deal if you’re buying partial shares.
Yeah nothing like a 10:1 stock split to have 10 billion shares flying around with little price movement to follow.
Look at Microsoft a la 2000. 10 billion share float and a cruise to the 20’s where it has languished for years. After doing stupid splits they are now buying back shares. WTF! ?
Split, dividends? NO THANKS!
@iphonerulez
Apple “stagnant?”
With a number of all time highs this year? What you’re is not very good.