Joe Expert

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Apple completes 7-for-1 stock split; Dow Jones imminent

10 Jun 2014

Apple Inc. officially completed its eagerly awaited 7-for-1 stock split on Monday; the tech giant’s first split since 2005. On publicising the split in April, CEO Tim Cook indicated that making Apple shares "more accessible to a larger number of investors” was a key factor in the decision. It means that Apple shareholders will receive an additional 6 shares for every share they currently own. Apple’s stock has gained 23% since the announcement in late April, generating more than $100 billion in shareholder wealth.

Apple’s outstanding stock has risen to approximately 6 billion shares from the 860 million previously in issue. The thought process behind the split is at present unclear, despite Cook’s intimation towards broadening the appeal of the iPhone maker’s stock.  Bloomberg analyst Jonathan Ferro suggests that the move could pave the way for Apple to be included in the 30 stocks of the Dow Jones Industrial Average. Prior to the split, Apple’s high share price kept it from being included in the price weighted indicator of the US economy. At $645.57 at the close on Friday evening, Apple share prices far exceeded the Dow’s most expensive component; Visa currently trades at approx. $214. However with that price obstacle now out of the way, Apple looks poised to replace either Intel or Cisco as the Dow’s main tech component.

The stock split is all the more noteworthy due to the recent corporate decline in such strategic measures. There have only been 57 splits among S&P 500 companies since 2009, in comparison to 375 such occurrences between 1997 and 2000. This again reaffirms speculation that Dow Jones membership is integral to Apple’s decision to divide its stock. The intention of Google’s 2-for-1 stock split in early April was to concentrate ownership of the company as opposed to curtailing its’ share price. Wall Street has looked favourably upon the developments to date; it’s thought that the new-found affordability of Apple stock will increase demand amongst the average investor in the coming days. Apple stock was up 0.59% to $94.25 at the close on Tuesday. To find the tightest fixed spreads on Apple shares going long visit our individual shares page.
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