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AAPL Stock: 113.99 ( + 1.98 )

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Apple announces historic 7:1 stock split, increases buyback program

updated 06:47 pm EDT, Wed April 23, 2014

Dividends also to go up on an annual basis in moves to increase stock value

In a surprise announcement, Apple will do a 7:1 stock split on June 6, giving stockholders of record as of June 2 an additional six shares for every one share of stock they currently hold. Trading will resume on June 9 at the split-adjusted price, which CEO Tim Cook has said the company wants to be more affordable so that smaller investors can get into the stock. Given today's closing price of $524.75, the average price of a share would drop to $75 if the split were happening now.

AAPL from 1987 to now
AAPL from 1987 to now


Apple has split its stock three times before, but only ever on a 2:1 basis. The splits happened in 1987, 2000 and 2005, with investors who have held stock since early 1987 having seen their investment increase by 5,284 percent over the decades. While the stock price on AAPL closed down on Wednesday, it has shot up $40 -- nearly eight percent -- in after-hours trading following the announcement of the split.

In addition, the company is expanding its stock-buyback program in an additional effort to increase the stock price, which Cook repeatedly said "does not reflect the true value of the company." Apple will buy back an additional $30 billion of its own stock, making the entire cost of the buyback program $130 billion. The company revealed that it was already spent nearly 70 percent of the original allocated funds on stock buybacks, but still has over a year to go to meet its goal.



Investors will see no immediate change in the value of their holdings as the split occurs, but along with a newly-announced annual dividend increase and the buyback program -- along with Apple's traditionally strong earnings, profits and holiday season dominance -- should see increases in value over time, barring unforeseen economic circumstances. The split will of course increase the number of shares outstanding, but Apple may continue to buy back and retire shares beyond December of 2015, particularly if the stock price has failed to rise to company expectations.




by MacNN Staff

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Comments

  1. And.reg

    Mac Elite

    Joined: 02-22-04

    7:1 is nuts. Did anyone see this coming 10 years ago?

  1. Stuke

    Junior Member

    Joined: 02-11-05

    AWESOME! 7x the stock I own now! And at this lower price, given Apples rock-solid business models/profile, the stock will instantly climb as new investors join...per the intent.

  1. efithian

    Fresh-Faced Recruit

    Joined: 04-21-04

    The first shares of AAPL that I purchased in the mid 1980's were $20 per share. This has now split 4 times: 2x, 2x, 2x, 7x which is 56 times as many shares. The value of my first share, split adjusted is $0.357. Nice.

  1. SergioRS

    Fresh-Faced Recruit

    Joined: 09-16-04

    Oh to have bought $15 in the dark days.

  1. ScottGG

    Fresh-Faced Recruit

    Joined: 12-12-07

    Ok so I know it's not the $12.35 a share it was when I saying to buy 22 years ago, when everyone was saying "Apple is dead, you're crazy to buy stock now." Even my own broker at the time was crying on his hands and knees not to buy this me apply stock at the time. I invested $40,000 which was my life savings in Apple stock. Today this one stock single stock has earned me over 13,000,000 in 22 years! It's really a no brainier when it comes to a price of $75 a share that you should BUY...BUY...BUY!!!!!!!
    Apple has proved they are a company that will be here another 100 years plus.

  1. Charles Martin

    MacNN Editor

    Joined: 08-04-01

    efithian: if you bought shares of AAPL in the mid-80s and held onto them, your retirement fund must be sitting rather pretty at the moment ... 5300 percent return on investment ...

  1. Charles Martin

    MacNN Editor

    Joined: 08-04-01

    ScottGG: you have no idea how envious I am of you! :)

    It comes down to whether you believe Tim Cook is the man to lead Apple forward for the next decade or so, or whether you think Steve was wrong in picking him. Time will tell, but I can tell you one thing ... when it comes to handling the excessive buffoonery you sometimes see from big-name investors and Wall Street analysts, Tim Cook does a splendid job. :)

  1. pairof9s

    Senior User

    Joined: 01-03-08

    Let me put it this way for me...I bought 200 shares in 2001 for $17.50. It split 2:1 once and now it's split 7:1. Why am I smiling...you do the math!

  1. djbeta

    Fresh-Faced Recruit

    Joined: 01-11-04

    This is a great sign from Apple.. Tim Cook is listening, and THIS move is innovative in the right way. A 2-for-1 split would not have achieved the kind of mental "bang for the buck" the investors were hoping for. Now, AAPL stock seems a lot more affordable to your average investor, which, gives it more of a perceived upside relative to other stock prices, and even though the stock price has nothing to do with it's value, technically, the psychological aspect DOES matter, and does impact value. So, THANK YOU TIM COOK.

  1. Flying Meat

    Dedicated MacNNer

    Joined: 01-25-07

    I don't care how awesome you think a stock is, it's still gambling. Do NOT invest your life savings to buy stock. Get some good advice about investing, from an actual investment counselor, If that is not an option, take a reasonable percentage of your savings (like 25-33% on the daring side) to invest. Seriously. It is gambling. If you do go all in, at least be aware that ANY investment could go belly up (that's why people diversify their investments, but that won't necessarily help you in a market crash), and possibly before you have a chance to cash out.

  1. And.reg

    Mac Elite

    Joined: 02-22-04

    I still remember when Apple's stock jumped over $100 a share after the first iMac came out. I thought that I misread the newspaper and just shrugged it off like (bah, must be a mistake).

  1. reader50

    Administrator

    Joined: 06-01-00

    So Apple is spending billions on stock buybacks to reduce the number of shares, while splitting the stock to greatly increase the number of shares. Does this feel weird to anyone else?

  1. Mike Wuerthele

    Managing Editor

    Joined: 07-19-12

    Originally Posted by reader50View Post

    So Apple is spending billions on stock buybacks to reduce the number of shares, while splitting the stock to greatly increase the number of shares. Does this feel weird to anyone else?



    The more stock Apple itself controls, the less likely an Icahn situation will pop up again.

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