Apple Stock Split 2023: Will there be an AAPL Stock Split?
Apple took 38 years as a publicly traded company to reach the $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 a stock split is the main boost behind this rally in the market cap.
Apple Stock Split: Apple Stock Split History
| Date | Split | Price before Split | 3 Months Change | 1-year Change | Notables |
| Aug 31, 2020 | 4 :1 | $502 | (4.8%) | 21.4% | Down 18% three weeks after split |
| June 9, 2014 | 7:1 | $656 | 6.7% | 38.6% | Unveiled Apple’s Watch three Months after the split |
| Feb 28, 2005 | 2:1 | $90 | (8.8%) | 59.6% | Down 23% 2.5 months after split |
| June 21, 2000 | 2:1 | $111 | 20.6% | (57.2%) | Fell when the dot-com bubble burst |
| June 16, 1987 | 2:1 | $79 | 31.9% | 16.6% | Down 50% during October 1987 market crash |
Also Read: Tesla Stock Split
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 a rather unusual effect on Dow Jones. As the S&P 500 and MSCI World Index take 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 the constituent’s market capitalization, uses the share price. Before the stock split, Apple’s share price was around $503 in the last week of August and that made it the Dow Jones Industrial Average’s largest constituent, after the split, Apple fell somewhere in the middle, greatly sabotaging its influence on the index’s return.
It reduced the Tech sector weighing in the index from 28% to 20% and to address this shortfall, the index added salesforce at a share price of $208. It was also followed by the removal of three big companies (Exxon, Raytheon, and Pfizer) from the index and the addition of Honeywell and Amgen to the index.
It proved that although the share split is technically non-consequential for a company, Apple’s split had a rather unusual impact on the Dow Jones Industrial Average.
Apple Stock Split: Outlook
Apple’s stock price is up by more than 33% in the last year. As stock prices have soared, key valuation metrics have also skyrocketed to their highest levels in more than a decade. The company’s price-to-earnings, price-to-sales, and price-to-free cash flow ratios all remain much higher than their five-year average. Today’s P/E is roughly 30, while the five-year average is nearly 20, Apple needs to grow at a steady rate or the share price could fall further.
Apple stock has climbed leaps and bounds since the last split and technically split has nothing to do with it but it does create a buzz that creates 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 the 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 the share price will be slashed below $100 (considering at least a 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 the long term. So, a good investor should not wait for a stock split if he intends to buy Apple’s shares.
Vineet Agarwal
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