As you all might know, Apple is splitting its stock 4-for-1 on August 31st, 2020. This is the fifth time Apple is doing the stock split, the last time in 2014 (7-for-1).
In this article, I’ll talk about everything about the Apple stock split and the key dates to know. I’ve also extensively covered the split related questions you might along with other important information. Let’s get started.
Apple Stock Split – My Takeaway
Apple stock is worth about $460 per share now.
As, Apple is splitting a four-for-one stock split, each share is worth about $115 (460/4) each.
However, the stock price is continuing to rise and should only increase post-split as many newer investors will take advantage of the lower stock price.
A stock split is just a sale.
In other words, if I hold a share of Apple now, my share price will be split after the split. If I buy Apple after the split, it will be on sale and much more affordable to the common man.
It literally changes nothing fundamentally for the stock. It is completely cosmetic.
People should realize you don’t take advantage of a stock split. If you buy pre-split, you pay $450 for your stake. If you buy post-split, you pay $115 for a stake 25% of the pre-split size. You still have to spend $450 to get the same stake.
Apple Stock Split Scenario
1 share of Apple x $450/share = $450
Now the stock goes up 100% and you have:
1 share x $900 = $900
Or: Apple stock does a split before going up, giving you this:
4 shares x $115 = $460
Now the stock goes up 100% and you have:
4 shares x $230 = $920
So, either way, you make $450 on your initial investment.
If you bought post-split and only bought 1 share of Apple, sure you’re only going to pay $115, but when it goes up 100% you will only have $230, not $920.
To have $920 you would still have had to buy 4 shares post-split and it would still have cost you $450.
The reason a split is because if you had only $115 to invest before you couldn’t do it because the smallest size you could buy is 1 share and that share cost $450.
Now with the split, it’s $115, so you can afford it, but it’s only worth 25% of what it was before.
It’s not like you’re getting three shares for free.
It just opens the door to people who previously couldn’t invest.
It’s more obvious with a stock like Amazon, where the price is $3200. If they split 32:1 now every investor with 100 bucks can buy a share of Amazon which opens the door to a lot more investors and creates buying pressure, even though the value of the company hasn’t changed at all.
Apple Stock Split Key Dates
Apple’s stock has split four times since the company went public. The stock split on a 7-for-1 basis on June 9, 2014, and split on a 2-for-1 basis on February 28, 2005, June 21, 2000, and June 16, 1987.
On July 30, Apple announced a four for one split and trading will begin on a split-adjusted basis on August 31, 2020.
According to Apple’s Investor Relations page, below are the key dates for the stock split:
|1. The Record Date: August 24, 2020: determines which shareholders are entitled to receive additional shares due to the split.|
|2. The Split Date: August 28, 2020: shareholders are due to split shares after the close of business on this date.|
|3. The Ex-Date: August 31, 2020: the date determined by Nasdaq when Apple common shares will trade at the new split-adjusted price.|
How does Apple’s 4-for-1 stock split actually work?
A 4-for-1 split means that three additional shares of stock are issued for each share in existence on the Record Date of August 24, 2020.
Here’s an example: Let’s assume that as of the Record Date (August 24, 2020) an investor owns 100 shares of Apple common stock and that the market price of Apple stock is $400 per share so that the investment in Apple is worth $40,000.
Let’s also assume that Apple’s stock price doesn’t move up or down between the Record Date and the time the split actually takes place.
Immediately after the split, the investor would own 400 shares of Apple stock, but the market price would be $100 per share instead of $400 per share. The investor’s total investment value in Apple would remain the same at $40,000 until the stock price moves up or down.
What happens if I buy or sell Apple shares on or after the Record Date and before the Ex-Date?
If you sell Apple shares on or after the Record Date (August 24, 2020) but before the Ex Date (August 31, 2020) you will be selling them at the pre-split price.
At the time of the sale, you will surrender your pre-split shares and will no longer be entitled to the split shares. Following the split, the new owner of the shares will be entitled to the additional shares resulting from the stock split.
If you buy shares on or after the Record Date but before the Ex-Date, you will purchase the shares at the pre-split price and will receive (or your brokerage account will be credited with) the shares purchased.
Following the split, you will receive (or your brokerage account will be credited with) the additional shares resulting from the stock split.
How will I receive the split Apple shares?
If you hold shares in a brokerage account, the additional shares to reflect the split will be deposited into your account in the days following the Split Date (August 28, 2020).
Contact your broker if you have any questions regarding timing.
If you have a share certificate or hold your shares directly with Apple’s transfer agent, Computershare Trust Company, N.A., the post-split shares will be deposited in a book-entry position and Computershare will mail you a statement indicating the number of shares that you own following the split.
Apple will not be issuing new share certificates. If you have a physical stock certificate, there is no need to return it. You will be credited with the split number of shares in a book-entry position.
My shares are held by a brokerage firm. How will my shares get adjusted for the stock split?
You do not need to do anything.
If you hold shares in a brokerage account, the additional shares will be deposited into your account to reflect the split in the days following the Split Date (August 28, 2020).
Contact your broker if you have any questions regarding timing. Your broker will ensure that your Apple stock holdings are properly adjusted for the stock split.
How will the stock split affect the number of shares outstanding and the future calculation of earnings per share (EPS)?
At the time of the split, the number of shares outstanding will be multiplied by four and earnings per share will be divided by four.
Will the number of authorized Apple common shares increase from 12.6 billion to 50.4 billion as a result of the split?
The number of shares outstanding and the number of authorized shares will increase at the same time in order to keep the shares available for future issuances, as a percentage of the shares currently outstanding, unaffected by the split.
Will the stock split change my percentage ownership of Apple?
No, the stock split will not change your proportionate interest in Apple.
Top 10 Popular Posts Of All Time
- Top 30 Canadian Blue Chip Stocks You Should Own
- How To Use A My Service Canada Account
- How To Watch Free TV Shows In Canada – List of 10 Best Sites
- VGRO Review – Vanguard’s Best Growth ETF Portfolio
- Top 7 Canadian ETFs You Should Own
- Top 150+ Dividend Stocks In Canada – Complete List
- Credit Karma Canada Review – Free Credit Score And Report
- CPP Payment Dates – How Much CPP Will You Get?
- Top 5 High-Interest Savings Accounts In Canada
- How To Open A CRA My Account?
Sagar Sridhar is a personal finance blogger from Canada. His genuine passion for personal finance coupled with his unique style of writing is what stands out. Professionally, he is a computer engineer, agile certified and has a master’s degree in Project Management. His writing has been featured or quoted in the leading Canadian publications such as Credit Canada and many other personal finance publications. While he is juggling between his day job and blogging, he is the main author on this blog and has miles to go before making the final pit stop.