Originally Posted by Rogifan
Does this mean we'll see less fluctuation in the stock as the mix of investors will change (away from institution and hedge fund)? I'm trying to understand Apple's rational behind this.
It's a way to improve the stock value as TYPICALLY, when a company announces a stock split, it gets the investment community excited.
Here's a little example on the upside of stock split.
Pre stock split, if you owned 100 shares and the stock went up $1 a share, you would make $100.
Post Stock Split, if you now owned 700 shares, and the stock went up $1 a share, you would make $700. Hmmmm. Obviously the downside would be equally as bad, but the psychological aspects of a stock split is usually for the positive and RARELY for the negative and the market is responding positively as the stock is up $49 a share in after hours trading, but the stock split hasn't taken effect.
They just ANNOUNCED the stock split, but if you look up the actual date it takes place, I think it might be in a month or so. you'll have to look up the actual date it becomes effective. I didn't listen to the conference call, but this is just how it is TYPICALLY done from EVERY stock split on any stock that I've own in the past.
Now, when a stock is trading at $71 vs $500 a share, it's a LOT easier to go up $1 per share at this lower price. Plus it pays a certain amount PER SHARE in dividends, so you'll make more in dividends if they continue to pay the same amount PER SHARE since you own more shares. Since $500 is a LOT of money, only the institutions can afford it, at $71 a lot more individuals can now afford to buy some, so they kind of want to attract more working class people rather than just institutional buyers.
Trust me, it's a VERY positive thing when a company does a stock split. IBM used to do it CONSTANTLY during the 60's when mainframes were the big technology play and if you invested back in the beginning before and just hung onto the stock, you would end up VERY rich. IBM was doing things like 10 for 1 stocks splits all of the time when I was first looking at the stock market.
Now, Apple MIGHT move from Nasdaq to the DOW Jones, which for whatever reason some companies want to do, personally I could give a rip which board they trade on and that's something I still don't always think is better or worse, but they could be included in the DOW Jones average. Some people look at stocks on different boards differently. But I personally couldn't give a rip. :-)
I currently don't own any Apple stocks directly, however some of the mutual funds I own probably do. I wish I had some extra cash to invest, especially if they are going to go after NEW markets. That usually means they have identified new growing markets that will be additional revenue/profits, which SHOULD increase the stock value.