Potential Apple stock split could be among largest ever

“Apple would have to execute one of the largest stock splits on record to lower its share price enough to make the stock more palatable to retail investors,” Vipal Monga writes for The Wall Street Journal.

“For example, if Apple wanted to cut its stock price to roughly $100 a share, it would have to perform a six-for-one split, which would be the third largest on record, according to Standard & Poor’s,” Monga writes. “Only the 10-for-1 splits by Capital Cities/ABC in 1994 and Metromedia in 1983 were larger.”

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.

Related article:
Analyst: Apple looking at stock split – August 8, 2012

43 Comments

  1. The only reason for Apple to split the stock is to get the share price down to a level that Dow Jones may add it to the Dow 30 along with MSFT & INTC. Maybe getting into that index is the possible reason.

    1. The only reason to get into that shitty index is that certain investment firms and mutual funds will be able to add Apple to their portfolios. It may not make enough of a difference to matter, tho.

  2. How? The theory is that by putting the stock in the hands of more “mom & pop” investors you increase the number of people holding the stock for the long term and thereby reduce the ability of speculators to manipulate the stock. It should be value neutral, but more stable.

    As opposed to a stock buyback, which as Cisco showed, simply destroys value except to speculators who sold during the buyback, or dividends which regularly return value to the owners.

    1. the only two reasons to do a buy-back are to off-set new shares issued to employees through options (preventing dilution), and to take advantage of buying opportunities created by rumour mongering short-sellers (which has the benefit of reducing volatility).

    2. I used to be against a split but I’ve changed my tune. The fact is that weekly option expirations are completely dictating are growth rate. Look at last few months. It’s become relatively simple to predict the Friday closing price. Figure out the max pain number and watch the Big Boys manipulate the share price within pennies of that number. To me, you need a cheaper share price so that the Big Boys aren’t the only ones moving the needle. I think there will be more accountability if the institutions have a small fear that average investors can foil their evil plans.

      1. If you can reliably predict the closing price within pennies every Friday or even once a month you don’t need a split you can get wealthy just trading the stock. Max Pain isn’t reliable. But I do believe a 10 for 1 split will have a stabilizing effect on the stock. Novice investors buy and hold.

        1. Yeah, I have to agree I don’t know anyone who can predict the closing price of any stock on any day let alone a particular stock on a particular day of the week. And REGULARLY! If Pocketrash can do that he/she is the first person in the history of the world to do so. Pocketrash could (and probably does) make as much money as he wants. The sky’s the limit! Wow! Unbelievable! I mean really unbelievable!!!

        2. Exactly right. Max Pain can only “predict” the past. Nobody makes money trying to play it. And even if it were true it certainly wouldn’t affect the long-term prospects.

  3. A stock split is a psychological move. Really the only way to benefit from a stock split is to already be in or buy right at the split, and hope less savvy investors raise the share price.

    Neophytes somehow equate a stock split with having an impact on the value of the company.

    One more example of the economic doom that we are in for because of the lack of basic economic education in this country.

  4. To answer your question in the ‘take’ MDN, rather than making the price more comfortable for less-savvy (and thus more fickle) investors it would bring AAPL into more indexes.

    For example, it could become part of the Dow Jones and if this were the case it would mean that index tracking funds, and all the closet index tracking funds, would have to buy and hold the shares.

    Such a move would make the shareholder register more stable … thus the opposite of what you are suggesting.

  5. Only the analysts are talking about a stock split. They are speculating at best or trying to instigate at worst. If/when Apple announces a split, then there will be something to talk about. Until then …. “move along. Nothing to see here.”

  6. MDN’s implication that savvier investors make the stock more stable is, in a word, hilarious.

    Do you think it’s the mom and pop investors that dump shares at any little hint of a rumor? Nope, because they wouldn’t even hear of those rumors.

  7. The real reason is that it cost money to perform the split. The industry sees apple as a cash cow and want to milk it.
    Whoever gets to execute the split will make quite a bit of money.
    I don’t care either way unless the cost is significant.

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