The American based tech company have announced its 5th historic stock split in an attempt to appeal to a broader base of investor
The stock split which was announced on Thursday is coming right after Apples stock price marched past the $400 price mark, doubling as the 5th split for the company since its initial split in 1987 when the tech giant enacted 2-for-1 stock split.
Subsequent to its first split in 1987, the company has had four more stock split in 2000, 2005, 2014, and the most recent one which is expected to take effect starting from August 24th. According to reliable sources, the company’s share which is currently priced at about $400 will now cost only about $100 the moment the split is effective.
Also, the new development will also mean that moving forward, dividends from the shares will also be quartered to reflect the share changes once it is effective. However, this will have no impact on Apple’s fundamental or market value as it is only intended to get more investors giving that lower stock prices attract more investors than the other way round.
prior to the first split, a share owned then would now be equivalent to 224 shares once the split is effective.
While Apple is currently undergoing its 5th stock split at $400 per share valuation, some other tech companies like Amazon, Tesla, Alphabet whose stock prices are above a thousand haven’t considered stock split in years. Although for various reasons, other than to allow access to more investors, a lot of companies do not attach so much importance to stock splitting.
Many companies would rather avoid splitting mainly because they believe it adds some level of prestige to the company, depending on how it is perceived (often to be more valuable). On the contrary, splitting allows a company to grow the number of its shareholders base, putting the company’s shares at lower risk during share sales.