Toggle sidebar Toggle sidebar
Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.

Apple Stock Split Coming?

Yeah, but now my two hundred shares becomes FOUR HUNDRED!!! It's like doubling my money! 😀

Sure it's a non-issue, but talking about stock splits is positive because when you know its happening you don't have that split second of fear that comes when you see the stock price 50% lower on that day. 😱

"Oh my God Apple stock crashed today... I guess I should take that double shift this weekend..."
 
"So what" redux

So, in an effort to be less theoretical 🙂apple: squared times pi to the ninth divided by the sum of split shares at a ratio of 54564376587 : 75746574574 = it's all psychological) and to be more practical, should we buy now before the (potential) split or after? It seems as though there might be more of a jump in price right after a split ("Oh, APPL is so 😎 and now I can afford it") or perhaps it'll go up right before a split in anticipation of the jump-on-the-band-wagoners buying in after the split (or perhaps in anticipation of a possible split, as I believe someone already mentioned).

Of course, the price may fluctuate based on what/when products are released/announced/expected, but taking that out of the equation, is there a better time to buy when considering a (potential) split, or is it too difficult to tell?

Forgive my n00bness, I obviously have no idea when it comes to investing (btw, what's the address for that guy who's been sending stock tips by e-mail...I'd like to get in on that! 😛 ).
jdo

p.s. just got my 19" Samsung SyncMaster 941BW ($164.99 after $20 rebate @ newegg.com!!!) and I'm liking it mucho...it's VERY nice for the price. And it's Windows Vista Certified.😀
 
split?.... not yet

give aapl a bit longer before any split. i would guess that between new macs, iphone, and leopard that the stock will be a candidate for splitting in 18 months or so.

disclaimer this is not investment advice. i am not suggesting any course of action. this is just what i would imagine to make sense for the value and growth of the company.
 
Reviving this thread on the event of AAPL's first close above $100/share.

Historically speaking, this is certainly splitsville for AAPL.
 
IJ Reilly said:
Reviving this thread on the event of AAPL's first close above $100/share.

Historically speaking, this is certainly splitsville for AAPL.
Click to expand...

Hey, I remember when they announced the split when it was around 126; it hit 130.25 that day (April 19,2000) according to Marketwatch.
 
The last split occurred on Feb. 25, 2005. The stock closed at $88.99 that day and closed at $44.68 the next.
 
Legolamb said:
Hey, I remember when they announced the split when it was around 126; it hit 130.25 that day (April 19,2000) according to Marketwatch.
Click to expand...

I remember the stock crashing right after MWNY 2000... I remind myself every morning in the mirror, what a complete and utter muppet I was for not investing 15 grand that very morning on that news. 😱 🙄 🙁
 
The abundance of misconceptions regarding stock splits is staggering. Stock splits are truly dollar neutral: Assuming a 2:1 split, twice the number of shares become worth half as much. As someone pointed out, earnings per share also become adjusted for the split. Should you buy before or wait until after the split to buy the stock? It absolutely does not matter. If Apple splits at one hundred and you buy one hundred shares pre-split, you've spent $10,000. If you buy "twice as many shares" post-split, you've spent $10,000.

What people are also not considering is the importance of percentage movement in a stock versus point movement in a stock. The more shares in existence, the less a stock will move. Thus, if Apple moves 2% in one day, pre-split, that represents a 2-point move, while post-split, it represents a 1-point move. Remember, twice as many shares outstanding (when the stock splits) means that the stock will only move half as much for any given investment in the stock. Yes, you can double your money if the stock again doubles post-split (of which there is no guarantee of that happening) but you can also do that if the stock doesn't split, and--in either case--the same amount of money will have been invested to get your investment to double.

If a company is small and does not have many shares outstanding, splitting can help add liquidity to its market, so there are advantages to a company splitting its shares. But those huge dollar gains that many people here seem to be counting on, should the Apple split, are phantoms.

So, again, splitting does not make your investment any more valuable. You may feel excited by having more shares but they will be worth half as much and move only half as quickly on a point basis.
 
The one thing you forget to mention is that at $100 a share less people may be willing to buy because its more expensive. If they can obtain 1 share for half that price they may be more inclined to make the investment. They can purchase more shares than before the split in hopes that the value will continue to increase and they'll make more $$ because they have more shares. So it's more of a perception thing (having more shares), even though it shouldn't really matter.
 
and...(from the school of perception)...a stock split usually indicates that a company is doing very well (in general terms.) So...it's an encouraging sign, that's all.
 
Share Price

bond2 said:
The one thing you forget to mention is that at $100 a share less people may be willing to buy because its more expensive. If they can obtain 1 share for half that price they may be more inclined to make the investment. They can purchase more shares than before the split in hopes that the value will continue to increase and they'll make more $$ because they have more shares. So it's more of a perception thing (having more shares), even though it shouldn't really matter.
Click to expand...

Bravo! You're absolutely correct - It's all about perception. Apple will always be perceived as a small company. Historically, whenever the price surpassed $100, caution lights have flashed, stating that the shares are "over valued." After a split, growth seems to accelerate with Apple. The incentive of having twice as many shares (twice as much leverage) does mean more profit, especially for smaller quantity investors, who plan to sell at the triple figure level. Perception is the key factor here, as well as knowing that the price has less distance to fall if a dark rumor should emerge.
 
DMann said:
Bravo! You're absolutely correct - It's all about perception. Apple will always be perceived as a small company. Historically, whenever the price surpassed $100, caution lights have flashed, stating that the shares are "over valued." After a split, growth seems to accelerate with Apple. The incentive of having twice as many shares (twice as much leverage) does mean more profit, especially for smaller quantity investors, who plan to sell at the triple figure level. Perception is the key factor here, as well as knowing that the price has less distance to fall if a dark rumor should emerge.
Click to expand...

No investor with even the remotest understanding of the stock market believes this, let alone acts upon it. They are completely neutral in terms of market value. In fact if you look at the actual history of splits for AAPL, each of the last three have been followed by significant downturns in share price. After the last split, in 2005, it took six months for AAPL to return to the value it had at the time of the split.
 
Market

IJ Reilly said:
No investor with even the remotest understanding of the stock market believes this, let alone acts upon it. They are completely neutral in terms of market value. In fact if you look at the actual history of splits for AAPL, each of the last three have been followed by significant downturns in share price. After the last split, in 2005, it took six months for AAPL to return to the value it had at the time of the split.
Click to expand...

Oil - Oil - Oil - Oil - the price of oil surged during that time period, sending Apple, the Dow, and NASDAQ down significantly for six months. It didn't take long for Apple to bounce back after that - the downturn had little to do with the split. Had Apple shares been in the $150s within that time period, they would probably have plummeted even more severely during that climate. The temporary downturns seen after splits have been sharply contrasted with rapid upswings toward the $100 mark......
 
DMann said:
Oil - Oil - Oil - Oil - the price of oil surged during that time period, sending Apple, the Dow, and NASDAQ down significantly for six months. It didn't take long for Apple to bounce back after that - the downturn had little to do with the split. Had Apple shares been in the $150s within that time period, they would probably have plummeted even more severely during that climate. The temporary downturns seen after splits have been sharply contrasted with rapid upswings toward the $100 mark......
Click to expand...

You're making my point. A lot of events have a real impact on stock values, some internal and some external -- but splits do not happen to be one of them. AAPL's upward trend over the last several years is based entirely on earnings and expectations of future earnings, factors upon which stocks splits have zero impact.
 
Yes, perception is important, but roughly 70% to 80% of stock is purchased by institutions (banks, mutual funds, pension funds, insurance companies...). They are the drivers in the market, and they don't care if a stock is at 100 or at 50. It is their perception that moves markets. Individual investors like you and me (retail investors) who are debating whether to buy fifty or a few hundred shares (or one share, as someone mentioned), and whether those shares should be bought before or after a stock split, are not going to move a stock much, even en masse. You are not buying "more shares than before the split" -- you are buying the equivalent of half as may shares at before-split prices. It does not make one bit of difference when those shares are purchased: $5,000 worth of AAPL is worth the same whether it's just before or just after the split. If Apple splits at $100, $5,000 will buy 50 shares pre-split or 100 shares post-split. In either case, $5,000 was spent; the number of shares is irrelevant.
 
True

IJ Reilly said:
You're making my point. A lot of events have a real impact on stock values, some internal and some external -- but splits do not happen to be one of them. AAPL's upward trend over the last several years is based entirely on earnings and expectations of future earnings, factors upon which stocks splits have zero impact.
Click to expand...

Yes, it is not the split which spurs the rise in price, it is the range at which the shares are priced. Consistently, shares have gone down dramatically after extraordinary earnings announcements, mostly due to conservative forecasts and out of fear that Apple could not possible maintain such exponential growth. However, with Apple in particular, a stock price over $120 seems to scare people, banks, companies, investment firms, all of which consider the price to be "too high" for Apple's stock. (again, perception) It's not the split which helps Apples stock grow, it's the price range in which it grows....
 
Price

mashny said:
Yes, perception is important, but roughly 70% to 80% of stock is purchased by institutions (banks, mutual funds, pension funds, insurance companies...). They are the drivers in the market, and they don't care if a stock is at 100 or at 50. It is their perception that moves markets. Individual investors like you and me (retail investors) who are debating whether to buy fifty or a few hundred shares (or one share, as someone mentioned), and whether those shares should be bought before or after a stock split, are not going to move a stock much, even en masse. You are not buying "more shares than before the split" -- you are buying the equivalent of half as may shares at before-split prices. It does not make one bit of difference when those shares are purchased: $5,000 worth of AAPL is worth the same whether it's just before or just after the split. If Apple splits at $100, $5,000 will buy 50 shares pre-split or 100 shares post-split. In either case, $5,000 was spent; the number of shares is irrelevant.
Click to expand...

Actually, they DO care....... in fact, they have been the ones who have claimed that Apple shares are "over valued," "too high," and "at the ceiling." Banks, investment companies, pension funds, insurance companies have been to turning over stocks more rapidly these days by purchasing them at the low end and selling high during shorter time periods. Few companies are holding tech stocks long term these days (with the exception of MS) If another split would slow down the exponential increases in Apple stock, perhaps this would be a good thing, as it has been growing at an astounding rate........
 
DMann said:
Yes, it is not the split which spurs the rise in price, it is the range at which the shares are priced. Consistently, shares have gone down dramatically after extraordinary earnings announcements, mostly due to conservative forecasts and out of fear that Apple could not possible maintain such exponential growth. However, with Apple in particular, a stock price over $120 seems to scare people, banks, companies, investment firms, all of which consider the price to be "too high" for Apple's stock. (again, perception) It's not the split which helps Apples stock grow, it's the price range in which it grows....
Click to expand...

DMann said:
Actually, they DO care....... in fact, they have been the ones who have claimed that Apple shares are "over valued," "too high," and "at the ceiling."
Click to expand...

You misunderstand. When analysts call a stock "overvalued" they are looking at numbers such P/E ratios, which are completely detached from the price of a share. They are based on market cap, which doesn't change at all as a result of splits. Splits are like making change from a $10 bill. You end up with more bills in your pocket, but they represent exactly the same amount of money. Anybody who thinks they've got more money after making change of a ten is just begging to be fleeced.
 
DMann said:
Actually, they DO care....... in fact, they have been the ones who have claimed that Apple shares are "over valued," "too high," and "at the ceiling." Banks, investment companies, pension funds, insurance companies have been to turning over stocks more rapidly these days by purchasing them at the low end and selling high during shorter time periods. Few companies are holding tech stocks long term these days (with the exception of MS) If another split would slow down the exponential increases in Apple stock, perhaps this would be a good thing, as it has been growing at an astounding rate........
Click to expand...

It's the investment analysts, not the entity buying the stock, who publish statements about stocks being "over valued" or "too high." Without going into my past, I can tell you that they often don't know what they're talking about. If a pension fund spends $1,000,000 or $10,000,000 or more to buy Apple stock, they are doing it for a reason. It's not easy for huge shareholders to suddenly buy and sell large numbers of shares at the "bottom" or "top." It's easy, perhaps, for a swing trader to do that with a few hundred or few thousand shares, but Apple's rise is a result of its earnings and future prospects, not some large shareholders buying and selling short term.

Another split will not slow down the "exponential increases" because the P/E remains unchanged regardless of the split, and it is a stock's price in relation to its earnings and earnings prospects that is probably the most important factor in determining whether a stock is overvalued or undervalued. Those "exponential increases" are simply a factor of supply and demand. There are now fewer shares outstanding than there would be should Apple split, so if buying moves a stock three points at 100, it would have moved up 3%. The same amount of buying post-split would also move it 3%, but the twice as many shares will have moved from 50 to 51.5 -- no difference. Splits are truly dollar neutral. Look carefully at a stock's percentage rise (or fall) in relation to it's price and you will see that a stock's split ultimately has no practical bearing on the value of your investment. Or, to coin a business phrase, "There is no such thing as a free lunch."
 
IJ Reilly said:
Anybody who thinks they've got more money after making change of a ten is just begging to be fleeced.
Click to expand...

Likewise, any investment firm that believes that a company can be overvalued at $120 for 1X shares yet fairly valued or undervalued at $60 for 2X shares isn't going to be in the business for very long.
 
IJ Reilly said:
You misunderstand. When analysts call a stock "overvalued" they are looking at numbers such P/E ratios, which are completely detached from the price of a share. They are based on market cap, which doesn't change at all as a result of splits. Splits are like making change from a $10 bill. You end up with more bills in your pocket, but they represent exactly the same amount of money. Anybody who thinks they've got more money after making change of a ten is just begging to be fleeced.
Click to expand...

The P/E ratio isn't detached from the price of a share: it is derived from the price of a share divided by earnings per share.
 
You must log in or register to reply here.
Register on MacRumors! This sidebar will go away, and you'll see fewer ads.
Top Bottom
Back