Apple’s 4-for-1 stock split to end dominion of Dow

Apple’s planned stock split will diminish its influence on the Dow Jones Industrial Average after the company’s 100% surge since March lows nearly dragged the price-weighted Dow back to an all-time high.

Apple's 4-for-1 stock split

Lu Wang and Vildana Hajric for Bloomberg News:

At its current price of $452 a share, Apple has the biggest weighting in the index at 11%. A 4-to-1 split now would drop its price tag to about $113 and send its ranking in the Dow Average down to 16th. Apple has rallied almost 55% in 2020, adding more than 1,100 points to a stock measure that’s fallen about 2% during that time.

In a world where passive investing rules the stock market, a drop of weight in indexes like the Dow Average is likely to prompt outflows from money managers who mimic benchmark changes… A stock split “is an appeal to retail,” said Charles Day, a UBS managing director and private wealth adviser with more than $600 million in assets under management. “It will make a difference for the Dow.”

The split, however, won’t affect Apple’s No. 1 position in the S&P 500, an index that’s weighted by market capitalization, rather than stock prices.

MacDailyNews Take: Apple’s stock has split four times since the company went public on December 12, 1980. The stock split on a 2-for-1 basis on June 16, 1987, June 21, 2000, and February 28, 2005, and split on a 7-for-1 basis on June 9, 2014. The upcoming 4-for-1 split will be Apple’s fifth stock split since going public.

Each Apple shareholder of record at the close of business on August 24, 2020 will receive three additional shares for every share held on the record date, and trading will begin on a split-adjusted basis on August 31, 2020.

Apple joined the Dow Jones Industrial Average effective with the opening of trading on Thursday, March 19, 2015.

Apple’s 4-for-1 stock split matters psychologically. It brings in more retail investors which increases demand which causes the price to rise. We’ve been through several Apple stock splits and they’ve only made things better. They’ve never hurt.MacDailyNews, July 31, 2020


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