updated 12:59 am EDT, Sat June 7, 2014
At closing prices, new split-adjusted shares should open at $92 per share
On Friday, Apple filed a brief notice with the US Securities and Exchange Commission making official the 7-to-1 stock split announced earlier this year. As of the closing of the market on June 2, all stockholders of record will receive seven shares for every share they held, once split-adjusted trading resumes on Monday, June 9. The move increases the total issuance of common stock in Apple from 1.8 billion shares to 12.6 billion shares, thus creating 10.6 billion new shares. AAPL closed at just $645.57 per share on Friday, near it's 52-week high.
Based on that price, shares should open on Monday costing $92.23 per diluted share, the first time a share of stock has been priced under $100 since 2007. In addition to the split, which Apple says will make it easier for investors to get into the stock, the company also authorized an additional $30 billion buyback program, expected to further increase the value of the remaining shares. In all, the company is expected to spend a total of $90 billion buying back its shares. It has already spent about two-thirds of that amount buying shares ahead of the split.
On top of that, Apple announced during its fiscal second quarter report in January that it would be increasing its dividend again, and planned yearly increases after that. "We're confident in Apple's future and see tremendous value in Apple's stock," said Apple CEO Tim Cook, "so we're continuing to allocate the majority of our program to share repurchases."
In addition to making stocks easier for small investors to get into, the confidence exuded by executives, the promised new products (including entires in "new categories") coming later this year and the company's expected dominance (again) of the holiday buying season, coupled with ongoing growth of its two leading products that have outpaced analyst expectations - along with its maintenance of high profit margins - has pushed pundits to predict higher targets than even the stock's closing Friday price, though few have offered a target significantly higher than the company's all-time record of $705 a share.
Assuming Apple's future updates and new products resonate with consumers, the lower per-share price may also help Apple achieve a reasonably-rapid increase in net worth; a number of analysts have predicted that over the next few years, Apple could become America's first company ever in history to be valued at a trillion dollars. Its current net worth sits at just over half that goal, at $556.08 billion. It would be difficult for the company to double its worth with individual shares priced at $650 -- but at $92 each, time and growth should make it easier for AAPL to increase its worth among investors, assuming external economic factors remain stable.