Apple Inc. (AAPL) has dominated the tech space through innovation in products as well as with its strategic financial moves, like stock splits.
This article will talk about Apple stock split history, the impact on investors, and a possible stock split in 2024.
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What is a Stock Split?
A stock split is that type of corporate action that proportionately increases the outstanding share quantity but decreases the per-share price. Thus, a 2-for-1 split results in issuing two new shares against one share and reducing the per-share price for the shareholders.
This therefore does not change the overall market capitalization of the company but makes shares available to a greater number of investors.
Apple Stock Split History
Apple has carried out five splits since its IPO in December 1980:
1. First Split – June 16, 1987:
Apple conducted a 2-for-1 split after the stock had traded as high as about $79. The split was carried out to make the stock shares more affordable and liquid for investors.
2. Second Split – June 21, 2000:
Another 2-for-1 split was executed as when the stock price has touched about $111. This hit hard for Apple as it was that the time when the dot-com burst happened and gave rise to a massive plunge to the stock prices.
3. Third Split – February 28, 2005:
Apple opted to conduct a 2-for-1 split in as its stock had touched four folds in value. This also worked wonderfully and contributed in rise of the stocks in terms of pricing.
4. Fourth Split – June 9, 2014:
The most major split in Apple’s history is a 7-for-1 split at the pre-split price of about $656. It was mainly done to be included in the Dow Jones Industrial Average.
5. Fifth Split – August 31, 2020:
Apple declared a 4-for-1 stock split when the share price touched $500. This was done so that retail investors could participate more easily in a season of high demand.
Implications of Stock Splits
Implications of Stock Splits
Stock splits, themselves, do not change market capitalization of the firm nor do they change the equity value of its owners, though they do have a number of important consequences that are of significant interest. Some of the consequences of stock splits are:
- Readily Available Shares: Lower share prices post-split can attract more retail investors who might otherwise have considered shares too expensive.
- Market Psychology: Stock splits might create sentiment and some level of excitement relating to the fortunes of the issuing firm which, in turn, leads to increased prices due to increased demand.
- Enhanced Liquidity: Splits help increase the number of outstanding shares that can be traded, thereby increasing liquidity and decreasing volatility.
Apple stocks have usually done well since splits in the past but past performance is never indicative of future results.
Will Apple Stock Split in ’24?
Investors and analysts continue to speculate about another stock split from Apple in 2024. Here are a few key considerations with the possible event:
1. Current Performance of the Stock:
In late October 2024, it is trading at around $222 per share. Compared to early in the year this is modest growth; though far from peak levels seen before all prior splits. It projects Earnings per Share of $6.59 for the FY 2024 with further sales growth of about 8.1%. Once again though, these figures themselves do not offer clear proof that a stock split is required now.
2. Historical Patterns:
It is worth noting that each time Apple’s stock split was done when the market price of the share of Apple had risen to a point considered too high to buy by retail investors. In the case of the last big share price rise before a split, this occurred during the run-up in August 2020 split when shares were in the $500 range. Since the current market price is much lower, most analysts feel that this is not as urgent now.
3. Market Sentiment and Analyst Views:
In the light of the positive market sentiment about Apple launches and innovations, including newly-launched iPhone 16 and improving AI capabilities, analysts are still not expecting an Apple stock split in 2024. It seems that the consensus is more on long-term growth rather than short-term adjustments through share splitting.
4. Potential Catalysts:
While there is no current indication that the company will split its stock in the near future, a few factors may prompt it to do so towards the end of the year:
- Product Launches: The release of new products, like the iPhone 16, creates demand and drives up the share price.
- Market Conditions: In case the stock price of Apple rises sharply due to excellent sales or favorable market conditions, the management may split the stock to make it affordable for investors.
Comparison with Nvidia’s Recent Stock Split
Comparison with Nvidia’s Recent Stock Split
While Apple is at its current position, a very recent major stock split of Nvidia Corporation (NVDA) has been on the headlines of the investment world. On June 7, 2024, Nvidia successfully completed an unprecedented 10-for-1 forward stock split as it had to split because of its soaring share price, which had reached more than $1,200 before the split.
Conclusion
Stock splits in the history of Apple reveal strategic approaches taken towards investor relations and perception in the market. As it had split earlier, when valuations and performances were increasing, the story is unlikely to be similar for 2024.
In summary, speculations on the Apple stock split continue amid positive market sentiment and product expectations, but current indicators do not support such an action in 2024. Investors must keep an eye on future product launches and overall company performance as the key factors influencing future decisions regarding stock splits at Apple Inc.
Also read: Tesla Stock Prediction 2025
