CUPERTINO – Apple Inc. (NASDAQ:AAPL), The iPhone and iPad maker announced plans to split its stock 7-for-1 for the first time in nine years, in late April with its plans to increase stock buybacks and boost dividend payments. Since then, Apple’s stock has climbed 23 percent, creating more than $100 billion in shareholder wealth while the Standard & Poor’s 500 edged up just 4 percent. Apple indicated that it elected to do a 7-1 split because, as the company noted, “we want Apple stock to be more accessible to a larger number of investors.”
According to reports, the stock split is set after the close of the trading day on June 6. Apple had originally cited June 2 and June 9 but June 6 is the day the company’s stock will split after the close of trading. So when the trading resumes on today, all of Apple shares will be bought and traded with the new split-adjusted price. Shareholders will not have to do anything since the transition to a stock split is automatic. Apple is executing a 7-for-1 split. That means every Apple stockholder gets six additional shares for every share they owned as of June 2. The distribution will increase Apple’s outstanding stock from about 861 million shares to about 6 billion shares.
Analysts said the stock split has “no material effect” on the actual value of Apple’s shares since the stock split only “multiplies” the total number of outstanding shares by seven and divides the value of each stock by the same figure. The stock will have no net change in value. Reports also said that after shares are split, the stock will be valued at $92 each.
Many analysts have raised their price targets for Apple shares with some as high as $700. Analysts said anything above $700 is significant. Apple’s stock had reached $702 in September 2012, the highest on the company’s record. Analysts believed the momentum is on Apple’s side as the company is fresh from its much-talked about Beats acquisition and its revelations in the Worldwide Developer’s Conference.
In less than six months Apple has gone through major changes in terms of increase in sales, large business deals and now a big stock split. Analysts noted Apple can maintain its stock momentum by introducing a new product in the market or announce a new line of business. Whether Apple will now make it into the Dow Jones is the “$3 trillion question,” says Howard Silverblatt, senior index analyst for S&P Indices.