There was a lot to like in Apple‘s (NASDAQ: AAPL) A big quarterly report came in Thursday afternoon, but the techwwherher’s meatiest bite is that it will run a 4-for-1 stock split by the end of next month. It is a movement that could be contagious among his fellow giants.
The nine companies with the largest market capitalizations have triple-digit price tags or more. High prices have obviously not hampered market gains in the past, but what do you think will happen now that the world’s most valuable company is on the path of the stock split? Don’t be surprised to see other high-priced darlings in the market do the same in the coming weeks and months.
Image source: Getty Images.
The price of a share is just a number
Six years have passed since Apple’s board authorized a stock split. Their fellow tech giants have held out even more. Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) It also deployed a stock split in 2014, and it was a controversial move as it simply issued a new non-voting share class to protect its internal share class with superior voting rights. You have to go back to 1999, just before the dot-com bubble burst, to find the last time Amazon (NASDAQ: AMZN) executed a division.
If Apple, as it approaches a price of $ 400, believes the time is right to organize a stock price closer to $ 100 to make it more accessible, why Amazon and Alphabet, with price tags of four digits, follow the market leader? ?
A stock split is a zero sum game. Whether you’re eating a whole pizza or slicing it, you’re still consuming the same amount of calories. However, there was a time when growth stocks routinely split their stocks as they approached high double digits. Listed companies wanted their shares to be accessible to a broader base of buyers in round lots.
A lot has happened to make stock splits less important these days. The race to zero between online brokerage commissions makes it cheaper than ever to buy a small amount of stock. An increasing number of brokers are now allowing investors to buy fractional shares. It has also become a badge of honor to have a high price on your shares. Well done, Warren Buffett.
However, seeing Apple shares react favorably to split post-Thursday market news suggests investors still like this seemingly abandoned art form. When the stock divisions were very favorable, they suggested optimism, since a company would not deliberately cut its share price unless it felt it would move higher in the future.
Stock divisions did not slow down FAANG shares before. Alphabet would go almost triple from its division in 2014. Apple has gone more than quadruple. Amazon is a 50-bag baler since its division in 1999.
Apple made PCs, laptops, smartphones, tablets, and more recently, smartwatches are great. It is about to cool the stock divisions, again.
