Apple Stock Split Will Make Apple Shares Cheaper

BusinessLeave a Comment

Share this Post

It's been nine years since Apple has offered a stock split. Thanks to the phenomenal success of the iPod, iPhone and iPad, Apple has never felt the need to split its stock. Shareholder confidence is at an all time low these days, however, and Apple has to take drastic measures to retain that confidence.

AFP reports that Apple announced a stock split in today's earnings results that saw the company bring in $45.6 billion in revenue. While the company is still doing incredibly well, shareholders are looking for Apple to introduce something revolutionary into the market. For the past few years, new iPhones and iPads have disappointed despite both seeing stellar sales.

So, what will the stock split look like? Apple's board says it will be introducing a seven-for-one stock split that will drastically bring the price of individual Apple shares down. The company says the stock split will help make Apple stock available to more investors. The split is expected to go into effect on June 2.

Alongside the stock split, Apple will also repurchase a number of shares this quarter. In its quarterly earnings, the company said that it's putting aside an extra $30 billion to buy back shares. In all, it expects to spend $130 billion this year in share buyback programs.

The stock split and share buyback programs underscore Apple's need to introduce something new to the market. While it's propelled to record revenue each quarter on iPhone sales, investors desire to see something new from the company. That something new may come in the form of a smart watch that Apple is rumored to be working on. The company is also expected to introduce a larger iPhone in 2014, but it remains to be seen if a larger iPhone would equal innovation. Android devices have been getting bigger for the past few years and they haven't exactly been heralded as innovative for the size. Instead, software is king and that's where Apple still has the edge. After the successful reception of iOS 7, Apple can coast for a few years on incremental updates.

Image via Wikimedia Commons

Leave a Reply