Apple Stock Split: When It Might Happen Again?

Apple Stock Split: When It Might Happen Again?
4 2 votes
Article Rating

Apple Stock Split: Analysing the scope of yet another stock split of Apple’s Stocks in the recent future.

Apple took 38 years as a public traded company to reach $1 trillion mark in terms of market capitalization, but just took two more years to add another trillion in its market capitalization and many believe that 2020’s version of stock split is the main boost behind this rally in the market cap.

Apple Stock Split: Apple Stock Split History

Price before Split
3 Months Change
1 year Change
Aug 31,2020
4 :1
Down 18% three weeks after split
June 9,2014
Unveiled Apple’s Watch three Months after split
Feb 28, 2005
Down 23% 2.5 months after split
June 21, 2000
Fell when dot-com bubble burst
June 16, 1987
Down 50% during October 1987 market crash

Also Read: Tesla Stock Split

Also Read: Apple Stock a buy

Apple Stock Split: Effect of Apple’s Stock Split of August 2020 on Dow Jones Industrial Average

Dow Jones Industrial average has had many companies in and out over its 136 years’ life but Apple’s 4-for-1 stock split had rather unusual effect on Dow Jones. As, S&P 500 and MSCI World Index takes the weight of a stock based on its market capitalization, Apple’s split did not have much effect on the index. The Dow, instead of using constituents market capitalization, it uses share’s share price. Before stock split, Apple’s share price was around $503 in last week of August and that made it Dow Jones Industrial Average’s largest constituent, after the split, Apple fell somewhere in middle, greatly sabotaging its influence on the index’s return.

It reduced the Tech’s sector weighing in the index from 28% to 20% and to address this shortfall, index added salesforce at share price of $208. It was also followed by removal of three big companies (Exxon, Raytheon and Pfizer) from the index and addition of Honeywell and Amgen in the index.

It proved that although share split is technically non consequential for a company, but this Apple’s split had a rather unusual impact on Dow Jones Industrial Average.

Originally tweeted by ikaris (@ikaris) on January 6, 2022.

Clear stock split wedge divergence; see apples and oranges for comparison details

Apple stock split

Apple Stock Split: Outlook

Apple stock price is up by more than 33% in last one year. As stock price have soared, key valuations metrics have also skyrocketed to their highest levels in more than a decade. Company’s price to earnings, price to sales and price to free cash flow ratios all remain much higher than their five years’ average. Today’s P/E is roughly 30, while five years’ average is nearly 20, Apple needs to grow at steady rate or the share price could fall further.

Apple stock has climbed leaps and bounds since last split and technically split has nothing to do with it but it does create a buzz which creates a momentum for the stock if not in the long term, at least in the short term. Also it seems highly unlikely that Apple will announce another stock split in the near future as prices are still climbing (trading around $172) as shares were close to $500 at the time of previous split. Apple may think of another stock split, but for the time being, this move will not be in the best interest of the company as share price will be slashed below $100 (considering at least 2:1 split).

Also history shows that it is never a bad time to buy Apple stock as long as investors are ready to hold it for long term. So, a good investor should not wait for stock split if he intends to buy Apple’s shares.

Vineet Agarwal

Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Stocks or Crypto Coins. Please consult a registered investment advisor to guide you on your financial decisions.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Newest Most Voted
Inline Feedbacks
View all comments
Would love your thoughts, please comment.x