5 things you need to know about Apple’s big stock split

Apple Stock Split

Apple shares will open under $100 for the first time in years on Monday, but don’t panic. As the company announced alongside its fiscal second-quarter earnings back in April, Apple is splitting its stock for the fourth time in the company’s history. The huge 7-for-1 split is obviously quite atypical and it will bring Apple’s share price from the $640-range down to the $90-range. But there’s plenty more to this story, and the Associated Press has put together a simple list containing 5 key things you need to know about Apple’s split.

First and perhaps most importantly, Apple’s 7-for-1 split could attract new investors. Apple’s expensive share price likely kept many potential investors at bay, but a stock in the $90-price range is obviously much more affordable than a stock trading above $600.

The split could also bring more prestige to Apple, which may soon be included in the Dow Jones industrial average. Apple’s high share price made it impractical to use in the DJIA, but that all changes Monday morning.

The AP also notes that splits are falling out of fashion. Only 57 companies in the S&P 500 have split their stock since 2009 compared to 375 splits between 1997 and 2000.

And of course this isn’t Apple’s first split. The company has completed three 2-for-1 splits since first going public, once in 1987, a second time in 2000 and again in 2005. In the year following Apple’s most recent split, the stock climbed 60%.

Finally, the AP notes that the bar now needs adjusting. Apple’s previous record high of $705.07 in September 2012 now works out to a split-adjusted $100.72. With Apple set to open around $92 on Monday morning, we could certainly be in store for some new records fairly soon.

Source:
Associated Press
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