Apple's four-for-one stock split takes effect today, with the company's share price dropping from roughly $500 to around $125 as of the start of trading this morning.
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The strong rise in Apple's stock price over the past five months has continued today, with shares trading nearly 3% higher in the first few minutes of trading. Apple shares have pared their gains since then, but are still up around 2% today.
Apple's overall market value of over $2 trillion is unaffected, as investors received three additional shares for every share of Apple stock they previously owned.
Tag: AAPL
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I recommend investing in tulips. They’ve always done so well.It’s literally a no-brainer to buy Apple stock. It’s like a guaranteed success.
This split was most likely motivated by the way the Dow Jones Industrial Average works. It's based on share price, not market cap. You add up the share prices of all the (30) Dow components, then divide by the DJIA divisor and that gives you the DJIA. When a Dow components' share price gets high in comparison to the other components' share prices, it has an outsized effect on the DJIA. Apple's share price was getting pretty high compared to the other Dow components, so it was split. When that happens, the DJIA divisor is adjusted so that the DJIA would be the same, based on the new share price, at the time of the split as it was before the split.What exactly is the point of stock splits in 2020 when we have fractional shares? Wasn't the point of stock splits to make them more affordable so more people could buy them, thus increasing their perceived value and making them a bit more liquid? All of that is kind of no longer relevant with fractional shares that most retail brokerages have adopted. Anyone care to educate me and correct me?
I'm not sure what the new DJIA advisor is after this adjustment, but it's something like .15 (with a bunch of digits after that). Previously Apple's share price represented more than 10% of the DJIA, now it represents around 3%.