In just a few days, Apple will be splitting its shares for the first time in over 9 years. The stock split will be a 7-1 split and will operate to make the stock more affordable to casual investors.
With the stock split just around the corner, below is a primer on why Apple is splitting the stock, what this means for investors, and important dates investors should keep in mind.
All shareholders who own Apple stock at the close of trading on June 2, 2014 will be eligible for the stock split. The actual stock split, however, won't transpire until Friday, June 6 when qualifying Apple shareholders will receive six additional shares for each share they own.
Concurrently, the new price of Apple shares will be the final trading price as of June 6th divided by 7. If shares of Apple on June 6 close at $690, the new trading price, which will go into effect on Monday, June 9 will be $98.57 a share.
How does this change Apple's financial situation?
Not at all. Apple's market cap will remain exactly the same and the company will be no more or less healthier than it was before.
So why Apple is splitting its stock
There are a few reasons why companies decide to enact a stock split. In Apple's case, the company has said outright that they want to make the stock "more accessible" to investors. Imagine, for instance, a small-time investor with $600 to spend. With one share of Apple today costing over $630, that investor can't even get in on the action. Post-split, with Apple shares trading in the $90 range, investing in Apple and snatching up a few shares all of a sudden becomes a possibility. This has the added effect of making the stock more liquid.
Of course, for investors with more than $600 to play around with, a lower share price has a psychological effect of increasing interest in the stock because investors enjoy getting more shares for their money.
Again, here are the important dates to keep in mind regarding Apple's upcoming stock split.
June 2 - Investors who own Apple shares as of this date qualify for the stock split
June 6 - Apple's stock will split at the close of trading on this day
June 9 - Shares of Apple will start trading at their new post stock-split adjusted price
There's a question in the comments regarding Apple's new dividend. Not too coincidentally, Apple's current dividend of $3.29 is perfectly divisible by 7, yielding a new quarterly dividend of $0.47.