“So much for the logic that says 1 share at $700 equals 7 shares at 100,” Philip Elmer-DeWitt reports for Fortune.
“Did Apple just pull a reverse Warren Buffett? Buffett, whose Berkshire Hathaway trades in six figures, famously wrote that he had no interest in a stock split that would replace his ‘clear thinking’ shareholders with more impressionable ones who ‘feel wealthier with nine $10 bills than with one $100 bill,'” P.E.D. reports. “Steve Jobs always said he agreed with Buffett. A stock split, mathematically, does nothing.”
P.E.D. reports, “With Apple up 25% since April 23, the day the 7:1 stock split was announced, it clearly does something.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Arline M.” for the heads up.]
The reporter needs to do a bit more homework !
Apple blew away WS estimates on the same day as split announcement…. Increased dividend and announced a huge 30 billion additional buy back.
Wwdc was a huge hit !
Product upgrade cycles and new product cycle is just around the corner.
25% up is not strictly due to the split.. There are other more powerful and tangible factors that brought this about and will continue to push the stock higher !
I’d say PED’s report is just an observation. Steve Russolillo’s prediction http://macdailynews.com/2014/06/09/apple-stock-is-ripe-for-a-lull/ on the other hand, was…uh…misinformed.
Correlation doesn’t imply causation.
@Yojimbo007
You nailed it. Given the truth of all you’ve just written, we actually have zero evidence on whether or not the stock split is a factor in the that 25% gain.
The idea is to get as close to ‘under 100’ as possible. So if AAPL had a historical high of 600 and had climbed back to 550, it would have been a 6:1 split. And if the high had been say 800 and the share price was 750, it would have split 8:1. All resulting in a share price in the 90s range.
Folks like purchase numbers just under 100, like iTunes songs for .99.
So splitting the stock price as close to ‘just under 100’ appears to be the magic threshold.
GM….
Where are you genius?
AAPL did not go up because of a stock split. AAPL went up because of the (unannounced but speculated) reasons Apple would time a stock split at this particular time, when it could have done one at any time (or not at all). The thinking is, if Apple is doing a stock split now, there MUST be some major “new stuff” coming soon. So, AAPL goes up 25% on that speculation.
If Apple does not deliver and officially announce reasons to justify that “pop,” the excitement and momentum fades; AAPL will go down. So yes, the stock spilt announcement caused AAPL to go up. But NOT because of the stock split.
The author clearly is missing something. The great Apple freeze is starting to thaw. People are finally starting to see that Apple can and will move past the S. Job era. However, my belief is that skepticism will continue to plague this stock forever, just as it has historically forever. Apple is the largest company in the world on paper, but very few understand or are willing to try and comprehend how Apple “thinks differently.” And, there in lies the problem for Wall St., not necessarily the rest of us.
Tell that to the many Mac users who are overdue for updates but haven’t seen any significant updates out of Apple in months, if not years.
?
Off the topic..but i had to share this beats advertising with u!
Simply amazing.
Those forces creating this add are part of apple now.
Very encouraging !
http://m.youtube.com/watch?v=v_i3Lcjli84
Will it get to $100 this month?
Ask us again on June 30th.