Apple announced a stock split on Thursday and it may not bode well for future gains in the Dow Jones Industrial Average.
31 Jul 2020 10:41AM
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REUTERS: Apple announced a stock split on Thursday and it may not bode well for future gains in the Dow Jones Industrial Average.
The iPhone maker made the surprise announcement in its quarterly report, saying it will split its stock four-to-one when trading opens on Aug. 31, Apple's first share split since 2014.
Stock splits have become rare on Wall Street in recent years, with just three S&P 500 members announcing splits in 2020, compared to an average of 10 a year over the past decade, according to S&P Dow Jones Indices.
Where did all the stock splits go? Where did all the stock splits go? https://graphics.reuters.com/APPLE-RESULTS/SPLIT/yxmvjrjgevr/chart.png
Splitting their stocks is a way for companies to make it less expensive to buy individual shares, potentially attracting retail investors who make small trades.
Amazon's shares cost US$3,051 each, while an Alphabet share sells for US$1,538 and Chipotle Mexican Grill's shares cost US$1,148.
With Apple's stock surging 6per cent in extended trade to US$408 following its strong quarterly report, the split means shareholders will receive three shares for every one that they own. Investors will be able to buy shares for closer to US$100 each.
Apple said it hoped to make the shares "more accessible to a broader base of investors."
However, brokerages increasingly let customers buy parts of shares, making the benefit of share splits less clear than in the past.
"Stock splits have become far and few between because people no longer care if it's a US$500 or US$100 stock, because investors can now buy fractions of shares," said HRead More – Source