Apple Stock Splits 7-for-1, Opens at $92 With All-Time High Just Over $100

[Tumbleweed666]

You are assuming that he would know that the shares would split eventually.

No I'm not. My whole point is that the split is irrelevant in this context.

For many investors (especially for retail), a stock with a price so high that you can only afford one (1) share makes it less attractive than another wherein you can buy multiple shares.

It might be psychologically more attractive but in terms of gains and losses its no different.

Thus, people tend not to spend all their money on a single share of apple, seeing as even if the stock went up 50 points (which would be a huge gain in the stock market), they would only net $50 on an investment of $700. Makes it not worth the risk.

Eh? In that case, if instead they bought 7 shares at $100 each they would only climb $7.15 each still for the same total of $50 !

Now that people can afford multiple shares, the stock looks more attractive. And they need not have any fore-knowledge of any upcoming splits. I spend $700, and own 7 shares, and if each share were to climb $50 (very likely given the upcoming catalysts), I would profit $350 on a $700 investment.

Thats just silly. If they climbed $50 post-split, they would climb $350 on a pre split basis. No difference.

Its apparent you dont understand it either. The stock is rising by a percentage. If it rises $50 at the moment thats aproximately a 50% rise, so on a $700 share the rise would be $350, not $50 as that would only be about 7% or so.

 

[NovemberWhiskey]

Eh? In that case, if instead they bought 7 shares at $100 each they would only climb $7.15 each still for the same total of $50 !




Thats just silly. If they climbed $50 post-split, they would climb $350 on a pre split basis. No difference.

Its apparent you dont understand it either. The stock is rising by a percentage. If it rises $50 at the moment thats aproximately a 50% rise, so on a $700 share the rise would be $350, not $50 as that would only be about 7% or so.

lol. Wow. Don't even know what to say. But enjoy the way you think.

 

[gco212]

lol. Wow. Don't even know what to say. But enjoy the way you think.

NovemberWhiskey, everything he said was dead on.

 

[gco212]

Apple is definitely to low in my opinion, just a PE rating of 15. That is they need 15 years of net income to pay back all the stock, that is very low for a growth stock. Coke has a PE of 28 and Amazon 500 and Google 30.

That the stock will double in price is a no-brainer for me, that's a given. But they can do so much more the next years in lots of sectors, home automation, medical equipment, banking, city building etc.

Apple is perfect for mid- to longterm investment, not if you need the money in a few months. I believe it will keep growing to at least PE 30 but we don't know for sure, it will probably dip now and then.

Two problems with your analysis. First, Apple is not really a pure growth stock anymore. It's paying off way too much in dividends to be considered a true growth play.

Second, while PE ratio is normally a great metric, it's flawed to use it with regard to Apple and other stocks with large hordes amounts of cash on hand and short term investments it owns. You have to remove them from the market cap in doing the calculation for a useable metric, moving the Price in the P/E calculation from $560b to about $400b (you actually want price per share, but with the split, I'm not doing the math haha). So the "real" PE ratio would be around 21.

 

[SpyderBite]

I got 100 shares as a perk while at Microsoft in 1995. I'm really enjoying this. Again. ^^

 

[Carnegie]

Two problems with your analysis. First, Apple is not really a pure growth stock anymore. It's paying off way too much in dividends to be considered a true growth play.

Second, while PE ratio is normally a great metric, it's flawed to use it with regard to Apple and other stocks with large hordes amounts of cash on hand and short term investments it owns. You have to remove them from the market cap in doing the calculation for a useable metric, moving the Price in the P/E calculation from $560b to about $400b (you actually want price per share, but with the split, I'm not doing the math haha). So the "real" PE ratio would be around 21.

If you account for cash in the P/E measure as you suggest should be done, the P/E (for Apple) goes down not up.

 

[NovemberWhiskey]

NovemberWhiskey, everything he said was dead on.

lol. You cannot assume that a $1.00 gain post-split would have been a $7.00 gain pre-split.

If you think that is dead-on, then you need to get out of the market ASAP. Or don't. It doesn't affect me.

 

[gco212]

If you account for cash in the P/E measure as you suggest should be done, the P/E (for Apple) goes down not up.

You're absolutely right. My mistake. It's still good to remove the cash though.

----------

lol. You cannot assume that a $1.00 gain post-split would have been a $7.00 gain pre-split.

If you think that is dead-on, then you need to get out of the market ASAP. Or don't. It doesn't affect me.

That's exactly how it works, upping the percentage and market cap by the same amount pre and post split. Splitting stock does not make Apple inherently more valuable. For reference, I have my 7, 66, 24, and 55 licenses.

 

[Tumbleweed666]

lol. You cannot assume that a $1.00 gain post-split would have been a $7.00 gain pre-split.

What would it be then ? Please do explain.

The stock price is being moved by companies selling multiple hundreds of billions of dollars worth of stock base don things like PE, future earnings etc etc.. Its not being moved by a handful of folk who dont have a clue that seven shares at $100 instead of one share at $700 are the same and decide they can afford to buy seven shares at $100 when they couldn't afford to buy one share at $450 (earlier last year) "because now its cheaper" .

And please do explain why you think that Apple stock at $700 or at $100 is equally likely to rise by $50.

Which is the implication of what you wote when you said that if a $700 share rose by $50 thats trivial but if a $100 share rose by $50, that significant.Well duh, but its not equally likely either is going to happen is it? Or perhaps, you actually think they are the same???

 

[NovemberWhiskey]

What would it be then ? Please do explain.

The stock price is being moved by companies selling multiple hundreds of billions of dollars worth of stock base don things like PE, future earnings etc etc.. Its not being moved by a handful of folk who dont have a clue that seven shares at $100 instead of one share at $700 are the same and decide they can afford to buy seven shares at $100 when they couldn't afford to buy one share at $450 (earlier last year) "because now its cheaper" .

And please do explain why you think that Apple stock at $700 or at $100 is equally likely to rise by $50.

Which is the implication of what you wote when you said that if a $700 share rose by $50 thats trivial but if a $100 share rose by $50, that significant.Well duh, but its not equally likely either is going to happen is it? Or perhaps, you actually think they are the same???

1. No one said AAPL is likely to rise $50 equally at $700 and $100. If you can't even follow the hypothetical I laid out, I don't see the point of discussing this with your further.

2. I'm only engaging you to rebut the words you have erroneously put in my mouth.

3. You cannot multiply anything that happens from here on out by 7 to extrapolate what WOULD have happened had the stock not split. If AAPL gains 10 pts tomorrow, you cannot say that had AAPL not split, it would have gained 70 pts. We don't know what the gain would have been, or if there would have been any at all had the stock not split. If you don't understand this, then I don't know what else to say. Enjoy your views.

 

[700-Grizz]

All I know is Im about to dump 10K into AAPL and let it ride for a nice long time, hoping it gets back into several, several 100's

 

[flatfoot99]

All I know is Im about to dump 10K into APPL and let it ride for a nice long time, hoping it gets back into several, several 100's

I just purchased 100 shares. good luck!

 

[700-Grizz]

I just purchased 100 shares. good luck!

Nice!!! good luck to you

 

[gco212]

All I know is Im about to dump 10K into APPL and let it ride for a nice long time, hoping it gets back into several, several 100's

You should probably try investing in AAPL instead. Good luck!

 

[700-Grizz]

You should probably try investing in AAPL instead. Good luck!

LOL--nice catch, that would be better

 

[NolBi1]

Been lurking for years but this was too good not to register for.

lol. You cannot assume that a $1.00 gain post-split would have been a $7.00 gain pre-split.

If you think that is dead-on, then you need to get out of the market ASAP. Or don't. It doesn't affect me.

3. You cannot multiply anything that happens from here on out by 7 to extrapolate what WOULD have happened had the stock not split. If AAPL gains 10 pts tomorrow, you cannot say that had AAPL not split, it would have gained 70 pts. We don't know what the gain would have been, or if there would have been any at all had the stock not split. If you don't understand this, then I don't know what else to say. Enjoy your views.

I think you need to look up the term "Market Cap". I am going to use whole numbers to make the math easier but the numbers are close. You can look up the numbers if you are curious but math is math. Can't argue it.

if AAPL's market cap is $600 Billion with 6 Billion outstanding shares then the value of each share is $100. If the market moves $1.00 to $101, AAPL's market cap will increase by $6 Billion (1%) to $606B.

Now lets do the math again pre-split. $600 Billion with 857,142,857.143 ($6B/7) outstanding shares at $700 each. What would the change need to be to equal 1% increase or $606B in market cap? You guessed it, $7!

$1 = 4 quarters. Just because you have 4 of something doesn't mean it is worth more. no matter how many outstanding shares there are the market cap is always constant.

All I know is Im about to dump 10K into AAPL and let it ride for a nice long time, hoping it gets back into several, several 100's

I just purchased 100 shares. good luck!

For those of you jumping on this AAPL split hype, just realize that stock prices are not everything. Let's say both AAPL and GOOG have a stock price of $100 per share. AAPL has $100B market cap with 10B outstanding shares and GOOG had $1B market cap with 100M shares, AAPL is worth 100 times more than GOOG even though both stock prices are at $100.

Also note that if you are waiting for AAPL to hit several 100's then good luck. At roughly $165 per share, Apple will be valued at a TRILLION dollars. Umm yeah.

PS: At about $104-$105 price AAPL would break its old record of $625B market cap back in 2012.

 

[gco212]

1. No one said AAPL is likely to rise $50 equally at $700 and $100. If you can't even follow the hypothetical I laid out, I don't see the point of discussing this with your further.

2. I'm only engaging you to rebut the words you have erroneously put in my mouth.

3. You cannot multiply anything that happens from here on out by 7 to extrapolate what WOULD have happened had the stock not split. If AAPL gains 10 pts tomorrow, you cannot say that had AAPL not split, it would have gained 70 pts. We don't know what the gain would have been, or if there would have been any at all had the stock not split. If you don't understand this, then I don't know what else to say. Enjoy your views.

We get it. You're dumb and don't understand most concepts in this thread, including earnings per share, market cap, and any understanding of valuing companies. Give it up.

 

[NovemberWhiskey]

We get it. You're dumb and don't understand most concepts in this thread, including earnings per share, market cap, and any understanding of valuing companies. Give it up.

lol. Whatever you guys say.

I won't even address the market cap discussion. Really?

Just curious how many of you actually own AAPL and how many people work in the banking industry?

 

[Raster Eyes]

lol. Whatever you guys say.

I won't even address the market cap discussion. Really?

Just curious how many of you actually own AAPL and how many people work in the banking industry?

These guys do know what they are talking about to a certain degree. P/E ratio, market cap, and other mathy valuation systems are important factors in determining how market changes and future earnings will or may affect stock prices. But in the end there is really only one thing that drives stock prices, and that is simply supply vs demand. If there are more people that want to buy a stock than sell it, price will go up, and if more people want to sell a stock than buy it, prices crash. In this sense, if a stock split does in fact drive people to want to buy more shares of a company (which it is questionable that it actually would, with the exception perhaps of individual traders, who don't really seem to have a huge sway these days) then you are sort of right in saying "You cannot assume that a $1.00 gain post-split would have been a $7.00 gain pre-split." (although it should have been worded more like "You cannot assume that because the company made a $1 gain post-split it would have necessarily also made a $7 gain pre-split in that alternate possible reality") because the split may have driven demand and therefore changed the performance of the stock price. And really, who knows, maybe the split could cause such widespread individual stock buyer craze that it drives the price up. But yes, that is unlikely, especially to a significant percentage and over a sustainable period of time.

Also note that if you are waiting for AAPL to hit several 100's then good luck. At roughly $165 per share, Apple will be valued at a TRILLION dollars. Umm yeah.

Honestly, this is a bit ignorant to say. In 1980 IBM was the most valuable company (I'm pretty sure, if not it was close) with a market cap of ~35 billion. Back then the idea of the company being worth 100 billion would have been equally as " preposterous", but they hit that mark just 7 years later. Making the assumption that a Trillion dollar market cap is absurd would be ignoring a long history of wild and unpredictable market growth and fluctuation.

So let's not forget that trying to predict the fickle movements of the collective mind and economy that is the stock market is nearly impossible. In the end, all of you are right in some senses and wrong in others and disputable all around. So just quit arguing because no one will ever "figure out" some elegant solution to predicting the movements of the stock market and pinpoint every piece of minutia that effects it, and we all know what happens when you try to do so: Pi by Darren Aronofsky =)

 

[NolBi1]

Honestly, this is a bit ignorant to say. In 1980 IBM was the most valuable company (I'm pretty sure, if not it was close) with a market cap of ~35 billion. Back then the idea of the company being worth 100 billion would have been equally as " preposterous", but they hit that mark just 7 years later. Making the assumption that a Trillion dollar market cap is absurd would be ignoring a long history of wild and unpredictable market growth and fluctuation.

So let's not forget that trying to predict the fickle movements of the collective mind and economy that is the stock market is nearly impossible. In the end, all of you are right in some senses and wrong in others and disputable all around. So just quit arguing because no one will ever "figure out" some elegant solution to predicting the movements of the stock market and pinpoint every piece of minutia that effects it, and we all know what happens when you try to do so: Pi by Darren Aronofsky =)

My apologies but I did not intend for it to come off as ignorant. In no way did I mean to imply that it could never happen. I just think expectations need to be kept realistic. Can it one day be valued at a trillion dollars? Sure, But "several several 100's" per share? Unlikely. You're right, no one knows where this stock market is going but for those who are new to this it would be wise for them to look into it a bit before they put thousands of dollars into AAPL just because the price is so "low"

 

[Raster Eyes]

My apologies but I did not intend for it to come off as ignorant. In no way did I mean to imply that it could never happen. I just think expectations need to be kept realistic. Can it one day be valued at a trillion dollars? Sure, But "several several 100's" per share? Unlikely. You're right, no one knows where this stock market is going but for those who are new to this it would be wise for them to look into it a bit before they put thousands of dollars into AAPL just because the price is so "low"

Unlikely? Yes. Impossible? Nothing is impossible when it comes to free market trends. Just 4 years ago you could buy 125 Bitcoin for a single dollar, people would have called you an idiot if you said that 4 years later a single Bitcoin would be worth over 1k dollars. During the dot com bubble people were paying big prices for stocks of companies with little to no earnings that were basically just inflated penny stocks. Tulips. Anything is possible and you can never rely solely on metrics for prediction and often hype and mania play a big roll.

But you are right, it is wise to err on the side of caution whenever large investments are involved and to never just assume that any company or commodity will be the next craze simply because you "have a feeling" it will be or because some analysts says it might be, though it would probably be worth investing just a little bit into it just in case. If you are new to trading you should never be putting large sums of money into a single company regardless, unless you are just that filthy rich and large sums of money are pocket change for you, not putting all your eggs in one basket is one of the oldest tricks of the trade (<-Like that double entendre? ). That said, an established company like Apple with such a great track record is not exactly a huge risk of an investment, and as unlikely as it is to start doubling in value it is equally if not way more unlikely to start halving in value, and it's always fun to hope for big future cash ins. So let the kiddies dream of parabolic growth and fat ROIs, that's what got us all into trading in the first place, and what keeps us watching the tickers, right?

 

[Bonte]

Two problems with your analysis. First, Apple is not really a pure growth stock anymore. It's paying off way too much in dividends to be considered a true growth play.

Second, while PE ratio is normally a great metric, it's flawed to use it with regard to Apple and other stocks with large hordes amounts of cash on hand and short term investments it owns. You have to remove them from the market cap in doing the calculation for a useable metric, moving the Price in the P/E calculation from $560b to about $400b (you actually want price per share, but with the split, I'm not doing the math haha). So the "real" PE ratio would be around 21.

Like stated above the PE rating is even more interesting if you count in the cash, then it should be around 12, very low indeed for a healthy company.

Apple is not a super growth company anymore but so is Coke who has a PE of 30, we are talking about a moneymaking machine with some interesting products to come. The Apple ecosystem still has some tremendous growth potential.

I give a buy rating.

 

[Dmunjal]

lol. Whatever you guys say.

I won't even address the market cap discussion. Really?

Just curious how many of you actually own AAPL and how many people work in the banking industry?

You are completely wrong in your analysis. As others have pointed out, there is no effect of the stock split on the price of the stock except perception.

Any news that would move the stock 1% would cause the stock to move $7 presplit or $1 post split. The same for a 2% move or a 3% move. Stocks move in percentages, not absolute dollars. Return is always calculated in percentages, not absolute dollars.

Just because we change the size of a ruler doesn't make you taller.

 

[Raster Eyes]

You are completely wrong in your analysis. As others have pointed out, there is no effect of the stock split on the price of the stock except perception.

Any news that would move the stock 1% would cause the stock to move $7 presplit or $1 post split. The same for a 2% move or a 3% move. Stocks move in percentages, not absolute dollars. Return is always calculated in percentages, not absolute dollars.

Just because we change the size of a ruler doesn't make you taller.

Unless the news that moves the stock 1% is the split itself... just saying.

 

[Tumbleweed666]

Unless the news that moves the stock 1% is the split itself... just saying.

True, but that news occurred weeks before so the 1% rise was factored into the price pre split There is also a possibility of a small effect from the split, specifically from it eventually getting into the Dow or people thinking it will. But again much of that should already be in the price.

But the number of naive investors who think that seven $100 shares are better value than one $700 and therefore buy when they previously wouldn't have isn't going to make any difference. Almost by definition, since they will be buying trivial numbers. No one who is buying tens or hundreds of millions of dollars of stock falls into that category of foolishness.

One way to back check on all this is simply have a look in say a months or two months time. If you look at the amount that apple rose and fell each day post-split it should be on average 1/7 what it rose and fell pre-split. In contrast, if the posters are right that a $1 rise(say) is equally likely on a $100 share than a $700 , the amounts will be the same. On average obviously. (or perhaps not obviously to those who dont have a clue )