Stock Splits: A Look at Apple's History and Lessons Learned
Apple's Recent Stock Split
Apple recently announced its fifth stock split in its history. The four-for-one split will take effect on August 24, 2020.
This move follows Apple's 2018 split, which also doubled the number of shares outstanding. Apple has a rich history of stock splits, with these splits dating back to 1980.
Historical Stock Splits
Apple has split its stock six times since 1980, as shown in the table below:
Date | Ratio
--- | ---
June 16, 1987 | 2-for-1
February 21, 1998 | 2-for-1
June 2, 1999 | 2-for-1
February 28, 2000 | 2-for-1
June 9, 2005 | 2-for-1
June 2, 2014 | 7-for-1
June 9, 2020 | 4-for-1
Benefits of Stock Splits
Stock splits can have a number of benefits, including:
- Increased liquidity: A stock split can increase the number of shares that are available to trade, making it easier for investors to buy and sell the stock.
- Lowered price: A stock split can lower the per-share price of a stock, making it more affordable for investors to buy.
- Increased investor interest: Stock splits can generate excitement among investors, which can lead to increased demand for the stock.
- Enhanced affordability: A stock split can make a stock more affordable for smaller investors who may not have the capital to buy a high-priced stock.
Risks of Stock Splits
Stock splits can also have some risks, including:
- Reduced value: A stock split does not change the total value of a company's shares. While the number of shares may double, the value of each share will be halved.
- Increased volatility: A stock split can make a stock more volatile, as the lower price may attract more speculative traders.
- Dilution of ownership: A stock split can dilute the ownership of existing shareholders, as the number of shares outstanding is increased.
Conclusion
Stock splits can be a useful tool for companies looking to make their shares more accessible to investors. However, it is important to understand the risks associated with stock splits before making a decision about whether or not to invest in a company that is considering a split.
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