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Apple Stock Split Coming?

It's all the same, until the stock starts to go up again. I bought the stock at 80 last time before it split, I got 20 shares, it split, I have 40 shares now. Now for every point it goes up, I make $40, instead of $20.

You have the same value at that instant, but if the stock ends up going up, you make twice the money.
 
CalPoly10 said:
You have the same value at that instant, but if the stock ends up going up, you make twice the money.
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Actually, no -- you don't. I've held AAPL through two splits. I'd have exactly the same dollar value of AAPL today if it had never split. The share price would just be four times higher.
 
WildCowboy said:
I don't really buy all of that, but I'll agree that analysts have a significant impact. I just don't see too many analysts saying that's its overvalued. In fact, they're upping their targets in recent weeks. Analysts are also smart enough to know that $92 pre-split and $46 post-2:1-split are exactly the same.

I know I'm sounding like I'm poo-poohing stock splits, but I'm not. I'm just saying that they mean less than they used to. I'm happy for a split, and there are plenty of reasons to view it as a good thing (management optimism - the big one, decreasing the bid/ask spread - smaller one, etc.).
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You are absolutely correct. The main issue here is affordability for those who do not have the resources of Warren Buffet. With the amount of money it would take for me to purchase 1000 AAPL right now ($91,000) I could purchase 10,000 shares of an undervalued mining stock for less ($60,000, two of which I have during the past 4 months) Those particular stocks have gone up about $3.60 a piece. (modest growth) Even if AAPL were to rise to $120, in the same amount of time, I do not make nearly the profit I did with the stocks with less expensive shares. ($72,000 profit vs. $29,000) That $100 mark seems to have become an emotional ceiling for many investors. Point being, owning more shares of a potentially overachieving stock is always better than owning less, and a split would make owning more shares possible.

IJ Really said:
Actually, no -- you don't. I've held AAPL through two splits. I'd have exactly the same dollar value of AAPL today if it had never split. The share price would just be four times higher.
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If you owned 1000 AAPL and held it for 4 splits, you would wind up with 4000 shares = same value. However, to purchase 4000 at the current price would be steep. A spilt would allow others to purchase twice as many shares they could currently afford. Since Wall Street puts limits on Apple's value ($110 for the next 6 months) it would make it seem that Apple had more room to grow after a split. In reality, it makes no difference whether the price splits or not. However, we are instead dealing with perception, psychology, and Market Analysts.
 
Good. I was hoping that something like this would happen soon. I have been wanting to buy some :apple: since October but had to stay away because the price of each share was so high. I hope that the shares I invest grow even more :apple:'s!
 
Stock Perception

WildCowboy said:
I don't really buy all of that, but I'll agree that analysts have a significant impact. I just don't see too many analysts saying that's its overvalued. In fact, they're upping their targets in recent weeks. Analysts are also smart enough to know that $92 pre-split and $46 post-2:1-split are exactly the same.

I know I'm sounding like I'm poo-poohing stock splits, but I'm not. I'm just saying that they mean less than they used to. I'm happy for a split, and there are plenty of reasons to view it as a good thing (management optimism - the big one, decreasing the bid/ask spread - smaller one, etc.).
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One more thing about perception - the sky is the limit, but the floor does exist. If AAPL cost $45/share, people look at the price, thinking, hmmm, it can't fall down too far (so it seems) - but AAPL at $450/share? Alot further for it to fall. Boy, what a ride BAIDU gave us when it first started up in the summer of '05.
 
DMann said:
If you owned 1000 AAPL and held it for 4 splits, you would wind up with 4000 shares = same value. However, to purchase 4000 at the current price would be steep. A spilt would allow others to purchase twice as many shares they could currently afford. Since Wall Street puts limits on Apple's value ($110 for the next 6 months) it would make it seem that Apple had more room to grow after a split. In reality, it makes no difference whether the price splits or not. However, we are instead dealing with perception, psychology, and Market Analysts.
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Will you take my 19 singles for a $20 bill deal? Sounds like you'd go for it.

Incidentally, 1,000 shares held for four, two-for-one splits, would amount to 16,000 shares.
 
Grimace said:
At the same time, Berkshire Hathaway shares are $3600/share. Warren Buffett has done well and doesn't care about splits. If you want in, you bring your wallet.
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FYI, currently Berkshire Hathaway B-class shares are at $3600/share. Cheap.

The class-A shares are at $107,700. :eek: They went up almost $2400 today. :)
 
DMann said:
One more thing about perception - the sky is the limit, but the floor does exist.
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I wish somebody would have found the floor on some of the stocks I bought back in 2000. Bought one in the mid-$30s and watched it drop to under a buck before it reverse split 8-for-1 about a year ago.
 
Could be more than that

Grimace said:
it's all a mental thing -- the value doesn't change.

Investors are more hesitant to buy 1 share of Google at ~$450/share than if they were to buy 10 shares at $45/share. Same cost, differernt sense of ownership.

At the same time, Berkshire Hathaway shares are $3600/share. Warren Buffett has done well and doesn't care about splits. If you want in, you bring your wallet.
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If I were to purchase 1 share of Berkshire Hathaway, and it goes up to $4000, I make $400 - not bad. However, if I take the same money and buy 10,000 shares of a decent mining stock, which rises only $2 in one months time, I make $20,000. Berkshire Hathaway, to make that kind of profit, would have to soar past historical boundaries ($23,600/share) - not likely. If you bought 1000 shares of Google at $460,000 in December of 2006, you'd be still waiting to make a profit today. IMHO, it's always better to be able to buy more shares for less, than less shares for more.
 
Can we just get a buyback please? Apple has what, $6B in cash? Either cough up a dividend or buy back your shares, Apple! Show a little love to your investors!
 
DTphonehome said:
Can we just get a buyback please? Apple has what, $6B in cash? Either cough up a dividend or buy back your shares, Apple! Show a little love to your investors!
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Money better spent buying technology, companies, etc.

Of course any stock buyback would likely be used for the employee stock options program instead of retiring stock these days.
 
Stock splits are nothing more than a way to attract less intelligent investors to buy a stock. I'm talking about the idiots who would rather own nine $1 bills than one $10 bill.

People who buy stocks for unintelligent reasons are more likely to sell for equally unintelligent reasons. Thus, splitting stocks makes share prices more volatile and less related to intrinsic value of the underlying business. This discrepancy could be positive or negative and there is no way to predict which it will be in advance.

I'd rather just encourage the accumulation of more intelligent owners like Warren Buffett has done, but that's just me. Splits do nothing to increase shareholder value.
 
Warren Buffett likes to joke about endowing chairs at business schools for professors of technical analysis so that future investors will be easier competition for him.

In that spirit, I'd like to nominate DMann as the MacRumors Minister of Finance.
 
adamcz said:
Warren Buffett likes to joke about endowing chairs at business schools for professors of technical analysis so that future investors will be easier competition for him.

In that spirit, I'd like to nominate DMann as the MacRumors Minister of Finance.
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One of the best back-handed compliments I've ever heard. Well played, sir!
 
A stock split is value neutral to the investor. The only difference it makes is a purely psychological one-- buying 200 shares feels like you're getting more stuff for your money than buying 100 shares. It gives the impression that the management has faith the stock will continue to climb. And, it gives people like DMann the feeling that they're further from the sky than the floor, so it'll have to go up.

Because much of the value of a stock is in the market's perception of it, this kind of psychological impact can, in fact, adjust the value of the stock. It used to be that the stock got a kick after a split because it became "more affordable". Then, as markets tend to do, this kick is anticipated and usually shows up before the split. I'm sure the rumor alone moved the stock a bit. Over the long run though, that artificial gain will bleed out of the stock and the value will depend on more fundamental factors.

This also gives a little more flexibility to management. Most financials are measured "per share"-- if there are more shares then managements forcasts can be a little less accurate without tipping the least significant figure.

mattscott306 said:
Good point, just something about being able to buy 100 shares rather then 50 shares seems better to me.

Strange.
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Not strange at all. We've all seen dozens of movies where people buy and sell shares in quantities of hundreds or thousands. You start to think that's how it should be.
DMann said:
If I were to purchase 1 share of Berkshire Hathaway, and it goes up to $4000, I make $400 - not bad. However, if I take the same money and buy 10,000 shares of a decent mining stock, which rises only $2 in one months time, I make $20,000. Berkshire Hathaway, to make that kind of profit, would have to soar past historical boundaries ($23,600/share) - not likely. If you bought 1000 shares of Google at $460,000 in December of 2006, you'd be still waiting to make a profit today. IMHO, it's always better to be able to buy more shares for less, than less shares for more.
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Then it sounds like you're much more interested in playing the volatility in penny mining stocks than in investing in a stable company like Apple or BH. You're talking about a $0.36 stock rising $2 in a month? Are you the guy that keeps sending me all those emails with investing tips?
 
DTphonehome said:
Can we just get a buyback please? Apple has what, $6B in cash? Either cough up a dividend or buy back your shares, Apple! Show a little love to your investors!
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I don't understand that. If Apple buys back shares, the number of shares goes down, and the value of Apple goes down (obviously Apple with $4bn less cash is worth $4bn less), so it doesn't make any difference. But whatever amount of shares Apple could buy, it is dwarved by the amount that is traded every day. If Apple pays a dividend, the value of the company goes down, and all shareholders who received money have to pay tax on it.

If you want to sell shares, sell them. If you want to buy shares, buy them. Don't ask Apple to buy your shares. Why don't you ask Microsoft to buy these shares; they have more money than Apple?
 
Whats your problem?

Is my concern not valid that if charges are pressed that the stock would drop considerably?

If this is not a big deal, why?

You don't have to be a jerk to make your point, just explain why its not a big deal.
 
DTphonehome said:
Yeah, well, I don't see them doing much of that, either. $6B is just too big a pile to sit on.
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Nonsense.

It is a very nice pile of money to sit on. It gives Apple the freedom to be able to do something really big should there be a situation where it makes sense. For example, Apple was able to pay out more than $1bn for flash memory when it was a good idea to do that without worrying about the money. Dell would have had to go to the banks, Gateway couldn't have done it.
 
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