Apple Shares Rise as Trading Begins Following Four-for-One Stock Split

[incoherent_1]

It seems like there are two camps here. One thinks AAPL is a junk stock. The other that it’s a guaranteed success.

As with many things in life, the best course is moderation. Anyone who invests all in something or nothing in another isn’t investing intelligently.

 

[PickUrPoison]

It seems like there are two camps here. One thinks AAPL is a junk stock. The other that it’s a guaranteed success.

As with many things in life, the best course is moderation. Anyone who invests all in something or nothing in another isn’t investing intelligently.

Who thinks it’s a junk stock lol? But no matter how great a stock is, if we have a 50-70% market correction, or even 20-30%, no stock will be safe.

Nothing is a “sure thing”.

 

[WordsmithMR]

What exactly is the point of stock splits in 2020 when we have fractional shares? Wasn't the point of stock splits to make them more affordable so more people could buy them, thus increasing their perceived value and making them a bit more liquid? All of that is kind of no longer relevant with fractional shares that most retail brokerages have adopted. Anyone care to educate me and correct me?

 

[Carnegie]

What exactly is the point of stock splits in 2020 when we have fractional shares? Wasn't the point of stock splits to make them more affordable so more people could buy them, thus increasing their perceived value and making them a bit more liquid? All of that is kind of no longer relevant with fractional shares that most retail brokerages have adopted. Anyone care to educate me and correct me?

This split was most likely motivated by the way the Dow Jones Industrial Average works. It's based on share price, not market cap. You add up the share prices of all the (30) Dow components, then divide by the DJIA divisor and that gives you the DJIA. When a Dow components' share price gets high in comparison to the other components' share prices, it has an outsized effect on the DJIA. Apple's share price was getting pretty high compared to the other Dow components, so it was split. When that happens, the DJIA divisor is adjusted so that the DJIA would be the same, based on the new share price, at the time of the split as it was before the split.

I'm not sure what the new DJIA advisor is after this adjustment, but it's something like .15 (with a bunch of digits after that). Previously Apple's share price represented more than 10% of the DJIA, now it represents around 3%.

 

[GalileoSeven]

Previously, my only exposure to AAPL was through ETFs (VT, VUG, VTI) - figured now would be the time to sell some outliers/low performers and get in on the ground floor with 2-3 shares.
👍👍👍

 

[IllIllIll]

This split was most likely motivated by the way the Dow Jones Industrial Average works. It's based on share price, not market cap. You add up the share prices of all the (30) Dow components, then divide by the DJIA divisor and that gives you the DJIA. When a Dow components' share price gets high in comparison to the other components' share prices, it has an outsized effect on the DJIA. Apple's share price was getting pretty high compared to the other Dow components, so it was split. When that happens, the DJIA divisor is adjusted so that the DJIA would be the same, based on the new share price, at the time of the split as it was before the split.

I'm not sure what the new DJIA advisor is after this adjustment, but it's something like .15 (with a bunch of digits after that). Previously Apple's share price represented more than 10% of the DJIA, now it represents around 3%.

Another reason: psychology.

Individuals tend to like whole numbers. More people would rather buy 1 share at $400 over 0.25 shares at $100. Plus, the lower stock price gives the impression that the stock is more affordable. Also, many people don't know you can buy fractional shares.

A lot of people avoid buying Berkshire Hathaway because they think they can't afford it.

 

[incoherent_1]

Who thinks it’s a junk stock lol? But no matter how great a stock is, if we have a 50-70% market correction, or even 20-30%, no stock will be safe.

Nothing is a “sure thing”.

True. But you don’t build a portfolio to prevent every possible market correction. You build it to avoid being bankrupted by another Nokia, Enron, etc.

 

[PickUrPoison]

True. But you don’t build a portfolio to prevent every possible market correction. You build it to avoid being bankrupted by another Nokia, Enron, etc.

Sure. But we weren’t really talking about diversification.

Remember, it wasn’t all that long ago that Apple’s share price went from around $235 to below $150 (Jan 2019). You can bet lots of people lost money along the way.

Of course here we are a year and a half later and it’s nearing $550 (pre-split).

 

[SuperCachetes]

This split was most likely motivated by the way the Dow Jones Industrial Average works. It's based on share price, not market cap. You add up the share prices of all the (30) Dow components, then divide by the DJIA divisor and that gives you the DJIA. When a Dow components' share price gets high in comparison to the other components' share prices, it has an outsized effect on the DJIA. Apple's share price was getting pretty high compared to the other Dow components, so it was split. When that happens, the DJIA divisor is adjusted so that the DJIA would be the same, based on the new share price, at the time of the split as it was before the split.

I'm not sure what the new DJIA advisor is after this adjustment, but it's something like .15 (with a bunch of digits after that). Previously Apple's share price represented more than 10% of the DJIA, now it represents around 3%.

I think you are correct about the way the DJIA works, but you're talking about the consequences of Apple's split, not necessarily the motivation for it. The decision to split is the company's alone - so why would Apple care if their representation is outsized? Fear of being booted? Modesty?

 

[Baymowe335]

I think you are correct about the way the DJIA works, but you're talking about the consequences of Apple's split, not necessarily the motivation for it. The decision to split is the company's alone - so why would Apple care if their representation is outsized? Fear of being booted? Modesty?

Don’t think too hard. It’s based on getting more investors interested in the stock and making it available to them. Not every broker does fractional shares and perhaps Apple doesn’t like that concept. Splits make the stock available to more investors.

Apple actually said this in a press release.

 

[SuperCachetes]

Don’t think too hard. It’s based on getting more investors interested in the stock and making it available to them. Not every broker does fractional shares and perhaps Apple doesn’t like that concept. Splits make the stock available to more investors.

Apple actually said this in a press release.

My question was for the poster that I quoted since they posited a theory that doesn't jive with anything you or I have ever heard about the "motivation." This isn't my first Apple split as a shareholder, and I understood what it was about the first time.

 

[incoherent_1]

Sure. But we weren’t really talking about diversification.

Remember, it wasn’t all that long ago that Apple’s share price went from around $235 to below $150 (Jan 2019). You can bet lots of people lost money along the way.

Of course here we are a year and a half later and it’s nearing $550 (pre-split).

Well, I was talking about diversification, but it’s all good

But more to your point, yes, buy and hold is much better than trying to time it.

 

[gbc204]

I think you're off by a factor of at least 3x, but yes, it still would have been a great deal.

Doh, yeah, was mistakenly using pre-split price! Would be $3600, not 12k. But still!

 

[ArPe]

You might be tempted to buy the dip following the market crash this week but before you do anything like that make sure you have clarity about shenanigans going on in the world at the moment. There’s plenty of reasons for market volatility for at least 6-8 months and we don’t know what it looks like on the otherwise of that timeframe yet. If you believe in Apple’s long term goals it’s OK to wait. If you want to buy a dip please ensure it is a small amount of money you don’t need to worry about.

 

[StraightHit]

Well this aged poorly