Apple Splits Stock — But is it Really Good News for Tech Investors?

Most Aussies were tucking themselves into bed early on Monday night, after the long weekend.

I’ll bet very few waited up to see what happened when the US stock market began trading after the weekend break.

So on Tuesday morning, you may have been surprised to see Apple [NASDAQ:AAPL] trading at US$92.71…wait, wasn’t it just trading at US$700-something?

Yes it was.

However, back in April, the head honchos at Apple decided to split the stock. For every old Apple share owned, investors would receive seven new Apple shares at the lower price.

It didn’t mean the Apple stock was worth seven times more (or less, depending on how you look at it). In fact, total shareholding is worth the same as before — Investors just hold more of them.

When the spilt became effective on Monday morning New York time, all chart prices were updated to reflect the new peak.

Instead of seeing a vertigo-inducing price peak of $705 in September 2012, charts now show an all-time high of USD$100.72.

This split means there are now about six billion Apple shares on issue, up from 861 million.

This isn’t the first time Apple has done this.

Apple did a two-for-one spilt in 1987, followed by another in June 2000, and then a third two-for-one split in February 2005, a couple of years before the iPhone came out.

But over the past few years, stock splits have been unfashionable.

In the past, when a share price reached $100, investors just expected a split.

Between 1997 and 2000, there were 375 stock splits. However, since 2008 only a handful of companies have split their shares each year.

Rumour has it that Steve Jobs was against a third split after the first two. Supposedly, Jobs ‘loathed’ the idea of anything that could be seen as diluting the value of the company. Even Tim Cook, the CEO of Apple, said two years ago that splits ‘do nothing for shareholders’.

However, the split has made the stock more attractive to tech investors who think $100 per share is more reasonable than $700 per share.

If anything, this can be seen as a psychological boost for the company and investors.

Mark Hulbert of Marketwatch.com explains it like this:

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