Stock Split is not a new thing in the stock market. There are many companies which have undergone a stock split. There are various reasons behind the split.
Apple company is well-known for stock-split. They have gone through stock split for about five times. The first split to place in the year 1987. After that, two more splits took place.
The recent stock split took place on 31st August 2020. The split has affected Apple stock price but not to a great extent.
It was a 4 for one stock split. Most of the investors were really worried about the split, but it wasn’t that bad. Apple has recovered very quickly from the fall.
Apple Stock Split 2020:
As per the recent split, the investors got four shares for each Apple share. The share price did not really fluctuate as the shares were simply divided.
The company increased the number of shares in circulation to offset the split. So if you have 1 Apple share you will receive 4 in return. One Apple share will split into four shares.
There was no bad blood among the directors. It was a peaceful split. The board has approved the split.
Reason for the Split:
Well, we don’t know the actual reason for the split. The board has not given an official reason for the recent split. One reason might be to decrease the high price of each share.
Most of the investors avoid investing in costly shares. If the shares are cheap, investors easily buy it. Apple has used the split so that the value of each share decreases as the total number of shares in circulation will increase.
With this split, the volume of Apple shares has increased four times. Even prior to this split, Apple has done the same thing to reduce the price.
The reason behind the split is to encourage investors to invest more money in Apple shares. It doesn’t affect the market capitalization of the company.
Effect on Share Price:
When the stock split, the share prices fall down as the volume of shares increases. Before the split, Apple Stock Price was $499.23. After the split, the share price went down by $127.62. As one share got divided into 4, the price went down.
But it is nothing to worry about because the market value remains the same. This move will help Apple to increase its stock price in the future. Most of the companies split their share so that the value of each share will increase in the future.This is how the split has affected the share prices. On Apple’s part is an excellent move. If you want to buy the stock of Apple, you can check AAPL stock news before that.
Disclaimer: The analysis information is for reference only and does not constitute an investment recommendation.