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
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.