Why the Apple Stock Split Has All Investors Excited
One the reasons that the AAPL stock split – along with Google’s and MasterCard’s – has stirred interest beyond the shareholders of those companies is that it suggests a shift in corporate thinking more amenable to stock splits.
The aversion to stock splits is only a recent phenomenon. Back in the 1990s and earlier, stock splits were almost expected when prices got to $100 or more.
The idea historically was to maintain appeal to retail investors. That’s the reason Apple Chief Executive Officer Tim Cook cited when he announced the Apple stock split.
Less than 20 years ago, between 1997 and 2000, there were 375 stock splits, an average of about 94 per year. Even after the markets recovered from the dot-com bust, the average in the mid-2000s was only about 35 per year.
The financial crisis of 2008 knocked that annual average number of stock splits down to the teens – where it has stayed despite a stock market rebound that has pushed the major indexes back to all-time highs.
The hope is that now that such marquee names as Apple, Google, and MasterCard have taken the stock split plunge, more companies will follow.
And there is no shortage of stock split candidates…