If you own Apple stock (in which case I’ll assume we don’t run in the same social circles), you might have woken up this morning and gagged on your gold-encrusted soft-boiled egg when you saw that Apple shares are now trading at $92. That would be a drop of about…85% from where the shares were on Friday at the close.
Or you could say that’s about one-seventh of the trading price on Friday—which would be because Apple’s 7:1 stock split takes effect today. What that means is Apple has increased its share volume to 12.6 billion shares from 1.8 billion. That seven-fold increase means you now have seven-times as many Apple shares that are worth one-seventh of the original share price.
According to an SEC filing on Friday:
“Effective on June 6, 2014, Apple Inc. (“Apple”) amended its Amended and Restated Articles of Incorporation to increase the number of shares of common stock, par value $0.00001 per share, that Apple is authorized to issue from 1,800,000,000 to 12,600,000,000 and to provide that as of 5 p.m., Pacific Daylight Time, on June 6, 2014, each share of common stock outstanding shall be automatically, and with no further action by the holder of such share, split into seven shares of common stock.”
It’s the first time Apple has issued a stock split in nine years. The company’s stock has split all of three times in its nearly 40-year history: 1987, 2000, and 2005. While shares plummeted by 57% in the year after the 2000 split (likely due to the dot-com bust), they rallied 60% in the year after the 2005 split.
Obviously, this takes Apple shares out of the gilded suite and into the streets where the commoners will now have access to them. This makes the shares much more attractive to investors who previously eschewed the shares because they were simply too expensive (at the stock’s all-time high of $700, what were you going to do? Buy one share? Go in with a friend on two?).
And it’s likely Apple shares will climb in the coming weeks irrespective of the stock split, since investors have much to look forward to in the second half of 2014. IOS 8 and Mac OS X Yosemite have been received well and point to big things on the horizon, including smart home integration and a comprehensive health hub.
There’s also a rumored iWatch coming in October, which will reportedly go above and beyond the realm of both the common smartwatch and the health tracker. J.P. Morgan’s Rod Hall remains skeptical, however, that the watch will include all the biometric measurement capabilities it’s said to have.
IWatch or no, Apple’s stock will, no doubt, climb in the coming weeks.
Image source: Nicholas Olesen