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Apple’s Stock Is Splitting — What Happens Now?

During Apple’s fiscal third-quarter earnings in July, the company announced that they would be doing a four-for-one stock split. In other words, for every Apple stock someone owns, he/she will receive three additional shares.  

Single shares will become more affordable, similar to Apple’s split in 2014.  

In 2014, Apple performed a seven-for-one stock split. Although the company was trading for $600+ a share, the split brought the share down to approximately $92. Not only was Apple more economical, individuals in the market before the split made seven times the profit (since the stock rose rapidly).  

When Apple announced this change, the stock jumped a staggering 6%, which added roughly $100 billion to its marketing value.  

 

The intention behind Apple’s split is to make “the stock more accessible to a broader base of investors.” Apple wants to attract retail customers by reducing the cost of a share. 

From selling iPhones to computers, it is apparent that Apple’s marketing is primarily retail. Through lowering the price, the company will attract retail investors through a higher financial interest. 

These changes do not change anything about the company; they are purely cosmetic. Splitting the stock simply makes it more accessible.  

On August 24th, Apple will initiate the four-for-one split. However, the company’s stock will begin trading for ¼ of its previous value on August 31st.  

By 5 p.m. on August 18th, shareholders will see four times the number of shares they previously owned in their portfolio. Does this mean you should buy before the stock splits on August 24th? 

No.  

When you buy the stock, it does not influence your gains or losses. Since the split does not impact the company, it is a personal decision when you think it is the best time to buy.   

Many investors reacted favorably to the news of Apple’s stock splitting. Since most splits come after long periods of strong outputs, this change demonstrates that Apple might have upward momentum. 

 

Whether you buy Apple’s stock now or after the split, you won’t see a significant difference in your long-term returns. For example, investors who purchased Apple in the early 2000s aren’t upset about a $3 to $4 stock difference, since a share is totaling more than $400 now.  

A stock split is good news for Apple; their growth and new product line provides evidence. Keep up with the technological trends and buy shares when you feel the time is right. If you are an enthusiastic Apple supporter and believe the company will maintain its dominance in the tech industry, use your judgment to determine when the ‘right time’ is.  

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