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Apple Announces Stock Split

Bigheadache said:
Hmmm, not sure why you guys think this is good news. Stock splits don't mean anything.
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Actually they do. It's more of a physiological impact and with Apple stock on a tear lately, the price is getting high enough to cause more casual investors not to buy; physiological impact.

So, in theory, a stock split is good for the casual investor as the price is lower and it's great for current investors as they get more shares. Sure, the value at the time of split doesn't change but once the stock climbs back up, you'll be glad you owned the stock when it split.
 
Yamson said:
I dunno... Looks to me like in the last two Apple splits the price went more or less flat, or dropped significantly (granted, due to factors unrelated to the splits). Splits don't necessarily mean increased growth.
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The chart is interesting; however, the year 2000 did not include iPod.
 
ac2102 said:
What is the effect of doing this? I understand the fact that there are now twice as many shares available at half the price, but what is the real economic effect?

-ac2102
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There is theoritically no economic effect... However, it does tend to point to a company that is doing well, and there have been studies that have shown that if you bought a stock on the day it announced and sold on the day of the split you would have made money...
It increases the float so that it is generally easier to buy and sell lots.
It also helps control the price range. There are some mutual funds that have controls on the price of stock the will *buy* and that the shares have to be within a certain price range. Also small investors that would like to purchase shares in 100 lots find it easier to come up with a one lot purchase. Lastly, this tends to be *very* good to long term option holders (like employees, who not only get access to twice as much stock, it is at half the price.).

Since all of these things are based around buying activity, it tends to push the price up.
 
ChronoIMG said:
Actually they do. It's more of a physiological impact and with Apple stock on a tear lately, the price is getting high enough to cause more casual investors not to buy; physiological impact.
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While I am enjoying the mental image of the physiological impact of a stock price. (It sure hits me in the GUT when a stock tanks!). I am pretty sure you mean psychological impact.
 
ac2102 said:
What is the effect of doing this? I understand the fact that there are now twice as many shares available at half the price, but what is the real economic effect?

-ac2102
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Some reasons that could apply:

1) Increase the number of shares available to entice/reward key people with stock options

2) The same reason for shares used to buy other companies.

3) Reduce the price so that Apple can repurchase shares, increasing the value of each share, and the number of shares Apple has available for the above

4) Apple is sitting on a lot of cash that might be better used investing in a company... a company like Apple.

IBM used to do this all the time.
 
ChronoIMG said:
The chart is interesting; however, the year 2000 did not include iPod.
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That's true... increasing iPod growth will probably lead to increasing stock growth. I don't think that really has anything to do directly with a split though. Historically speaking with AAPL, splits have not lead to significant immediate growth.
 
trose said:
What you gotta realise is that stock "gurus" rarely really have a passion or interest in the companies they invest in. They look at the numbers and make up their mind. They don't know anything about Apple's history or plans besides what was put out in press releases.
They are experts at reading numbers and predicting standard trends, but they will not be able to cope with a company that does something non-standard. Which of course, we all know Apple is anything but standard in it's earnings or business.

One tip the Motley Fool (really the best investing resource for common folk) gave me that has payed off, is investing in companies and markets you know.
Besides Apple I have also invested in a couple other companies in fields I enjoy, and have made considerable (Double value) gains on them in the last 2 years, also.
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This is true but the advice of these so said gurus affects a stocks over all value. If they just look at a graph and see that Apple took a plunge and don't do the research to see the stock split then they will not recoomend a buy on the stock causing the stock to dip lower and lower. This is exactly what happened with the last stock split.
 
When a stock splits, its value does not suddenly drop. For example, the last split occurred on June 21, 2000, just a day after AAPL hit $100. If you look at a chart of historical prices, you don't see the stock value going from $100 to $50 on that day. All of the previous prices are adjusted for the split. So it looks like it was trading for $50 on the previous day. After the split, the stock bounced around between $50 and $60 until Sept 29, 2000, when it dropped from $48.13 to $25.75. This was unrelated to the split, and was due instead to lowered profit expectations to Q4 2000 (see http://news.com.com/2100-1040-246359.html?legacy=cnet ).

In March, after the split has taken place, you can look at the Apple price graph for the previous month, and it will look like the stock was trading around $40 -- not $80. The chart will be split-adjusted.
 
billystlyes said:
I almost bought Apple at 18 dollars! :mad: I did however buy some sahes at 40! :p
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I bought mine around that price. The 18 that is. :)

The primary purpose and benefit for a stock split is to make it more attractive to more people by lowering the cost per share. The lower the price, the easier it is for people who don't have the ability to dish out $10,000 for stock to get in and purchase. A stock split doesn't do anything of value to the stock other than raising the amount of available shares. The hype will draw it up before the 18th, then after the split occurs it'll take a little bit for people to get over the realization that it didn't add any value to the stock, nor did it detract any value. It just makes it easier to purchase for individual investors.
 
Max12 said:
Take a look at the following file:

http://www.snl.com/interactive/lookandfeel/4004205/StockSplitQ&A.pdf
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That answers my question... People who buy in between the 18th and 28th still do essentailly get to have their shares split on the 28th.

Q. What happens if I buy or sell shares after the Record Date and before the Split Date?
A. If you sell shares prior to the Record Date (February 18, 2005), you will be selling them at the pre-split price. If you sell shares after the Record Date (February 18, 2005) but prior to the Split Date (February 25, 2005) you will be selling them at the pre-split price and the shares will trade with a “due bill” (i.e., the shares you trade are “due” an equal number of shares issuable in the stock split). When you sell your shares, you surrender your pre-split shares and any shares due. The due bill is transferred to the new owner of the shares.
If you buy shares after the Record Date but before the Split Date, you will purchase the shares at the pre-split price and will receive a due bill. Following the split, you will receive (or your brokerage account will be credited with) an equal number of shares as a result of the stock split.
 
Lowered prices mean applekid is going to buy a couple of more shares. :cool:

Remember, a stock split means a share of Apple will be about $40. And people with shares already (like myself) will have more shares.
 
Stock Split good or bad...

It really depends on who you are.

If you're a recent investor, it's not bad. If the stock drops down to $20.00, you still have more stock than you started off with.

If you bought it back when it was below 15.00, you can sell some now and still be way ahead of the game.

If you're looking to buy some, this is a good time to do so. Esp. if that Walmart deal happens, because the stock was projected to hit $100.00 before the split and could now run back up to $80.00 after the split (if this is announced).

Also at a lower price Apple could if they wanted to start buying back blocks.

Whatever
 
For those currently holding shares through brokerage firms:

Do you still receive proxy's in the mail? Or have the option for a stock certificate? Do you get any other notices from Apple in the mail i.e. notice of shareholder's meetings etc?

Or does that information go to your broker?
 
Bigheadache said:
the flaw in your statement is that professionals, instos, and pension funds make up the big portion of investors and they see through this, plus they aren't impacted by minimum parcel sizes. As a result, the window where prices spike is very small. If there is a gain, you can bet it will be arbitraged out.
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Really? Clearly you never bought Microsoft stock back in 1978. How many splits later and long-term holding has left the average investment of $2000 now valued in the millions.

I guess as many have pointed out you don't grasp the concept of Volume and want to live in the mathematically constrained world of Area.
 
faintedlife said:
I bought mine around that price. The 18 that is. :)

The primary purpose and benefit for a stock split is to make it more attractive to more people by lowering the cost per share. The lower the price, the easier it is for people who don't have the ability to dish out $10,000 for stock to get in and purchase. A stock split doesn't do anything of value to the stock other than raising the amount of available shares. The hype will draw it up before the 18th, then after the split occurs it'll take a little bit for people to get over the realization that it didn't add any value to the stock, nor did it detract any value. It just makes it easier to purchase for individual investors.
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I hate you I hate you so bad! JK Way to go!
 
here is some fuel for the rumor fire.

Apple releses 10.3.8
apple updates power books

Then apple announces 2 for 1 stock split, and wall street rallies

Split happens on the 18th.

Who wants to bet me that on the 18th, apple makes a few more announcements to give the stock a little momentum..............?

PowerMacs have not been updated for 303 days!!!!!!!!!!!!!!!!!
I bet they get updated on the 18th. Maybe the iMac's too..........

thoughts?
 
Trout74 said:
here is some fuel for the rumor fire.

Apple releses 10.3.8
apple updates power books

Then apple announces 2 for 1 stock split, and wall street rallies

Split happens on the 18th.

Who wants to bet me that on the 18th, apple makes a few more announcements to give the stock a little momentum..............?

PowerMacs have not been updated for 303 days!!!!!!!!!!!!!!!!!
I bet they get updated on the 18th. Maybe the iMac's too..........

thoughts?
Click to expand...

That's the day my .Mac account renews. I guess they're speculating that I will renew it - thus causing a stock buying frenzy! :D :D :p :p :p

Now seriously.... I like your thinking... Maybe an announcement re the Cell? Or maybe they're just gunna tell us how well the Shuffle and Mini have sold.
 
dloomer said:
This must be a dumb question since no one has asked it, but what happens between the 18th and 28th ... is AAPL just not traded then? If you have to hold the stock before the 18th to get in on the split, but the split doesn't happen until the 28th...
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It will be traded.

Nothing much, unusual should but it likely will.

The stock was up $2.85 or 3.64%, today.

Here is what I suspect will happen: Because of Apple's visibility, the price will rise from today's $81.21 to the $90-$100 range by the 28th. After, market close the holdings & prices will be adjusted to reflect the split.

The few day/weeks, there will be some profit taking by the pros, driving the price down to the $30-$35 range. Then the pros will begin to get back in.

That is what I think will happen, however the profit-taking could take place before the split... driving the price down to the $60-$70 range by the day of the split,

In either case, AAPL will likely be trading in the $30-$45 range by mid March... about the same as it was trading a year ago.
 
Minkintosh said:
I was thinking of getting some apple stock. Where is a good place online to buy some. DOes anyone know?
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I use Scottrade-- flat fee of $7 per trade.

You have to setup an account wioth a $5,000. mimum value.

I have used them for a 1 1/2 years & like them a lot.

Only downside, their advanced Elite service is available in win onl--- bummer :(

It has lots of extras-- charts, Level II (see the trade traffic details)

www.scottrade.com
 
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