It's time for the apple to split, and we're not talking fruit here. Apple, Inc. (NASDAQ: AAPL) sits at an all-time high, closing above $161 last Friday, and it may be that another stock split is in order. After all, 2-for-1 splits have happened before, with the most recent in 2005.This time, it's different. Before -- in 1987, 2000 and 2005 -- Apple's shares were worth roughly $100 each. They're quite a bit above that now, right? It another 2-for-1 split already overdue? Has Apple's meteoric share price been even a surprise to the company itself, explaining the delay?
A split now would signal to the world that Apple believes it has even more room to grow. But does it? From the unrelenting excitement about its products, it most likely does, despite the fact that the company appears to be more arrogant than ever. Shh -- don't tell the market makers, though.
If a split does happen, might it be a 3-for-1? That would bring the share price into the $50 range instead of the $80 range, which is a more likely a scenario in my view. One thing is for sure -- Apple will most likely think harder and harder about splitting in some fashion as shares get within shouting distance of $200. It's headed there soon, according to my colleague Georges Yared.
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Reader Comments (Page 1 of 1)
10-08-2007 @ 1:21PM
Roger Pyle said...
With 875,000,000 shares outstanding, and "only" 1,800,000,000 authorized, how could they do a 3/1 split unless they went through a shareholder vote to issue more shares?
10-08-2007 @ 2:30PM
Steve said...
In these days, with electronic trading, a split is wishful thinking for short term traders. In the longer term there is no benefit. AAPL demonstrates sufficient liquidity by regularly trading with the highest dollar volume of any individual stock. Higher price can yield a lower percentage to the typical spread and with fewer shares involved reduce trading costs for investors. A split is actually a negative for investors and an indication that the fundamentals alone do not justify a higher value. Apple has suffered after the last splits.
10-08-2007 @ 3:32PM
Jeff said...
"A split now would signal to the world that Apple believes it has even more room to grow"
What?????
That makes no sense. A split would just allow more less informed retail investors to play around in a stock they likely are buying for the wrong reasons and will just increase the volitility. I guess you are saying that Google is saying to the world they do not believe they have more room to grow?
10-08-2007 @ 4:37PM
Paul said...
Apple split? This is a good question on the day that Google broke $600. Apple is going to split when Google splits. If it's working for Google (no split) then it's going to work for Apple. BTW, 29.6 million shares af Apple traded today.
10-08-2007 @ 9:03PM
starwxrwx said...
It was on this site I read that splitting was no longer a given in the google age of trading, enough investors being now comfortable at these high prices.
The comments above flesh out this idea.
10-09-2007 @ 1:55AM
rip said...
Articles like these are just ignorant.
Anyone that knows anything about stocks knows that splits are inherently worthless. Or are you someone that thinks, like a six year old, that 2 quarters is more than a fifty cent piece?
Apple not splitting now, like in the past, means that they have sensible management. A split would do nothing for the shareholder or company other than increase overhead in the form of paperwork.
10-09-2007 @ 3:37AM
Rollin said...
The Google example is a great one and it's what Steve Jobs himself pointed to when asked about a split at the last shareholder's meeting... which Mr. White should know if he had done any research.
Apple will not split any time soon. There's no reason to.
10-09-2007 @ 2:09PM
deejay said...
The John and Jane Does of the world's investors feel that they can't afford $166.00 or $600$ a share for any stock. BUT at $83.00 or $300. they might just jump in and buy some shares. Apple or Google then becomes affordable for them to buy.
Their felling is that the stock will run up again.
I remember when Ebay was around $l44 per share and it split........it never had a run up after that. Ergo, a word to the wise.....don't bank on it.
10-24-2007 @ 11:14PM
Tom Binder said...
Apple has no need for a split unless it's looking for a new infusion of capital. I think not.