Apple (AAPL) to Trade Below $100 For First Time in Over 7 Years
- Market Wrap: Couche-Tard to Acquire The Pantry; MetLife Deemed SIFI; New CEO at Kraft Foods; American Apparel Catches Bid
- Nike (NKE) Tops Q2 EPS by 4c; Adjusted Futures Orders Rose 11%
- After-Hours Stock Movers 12/18: (PETX) (NQ) (RHT) Higher; (NKE) (APP) (SDRL) Lower (more...)
- MetLife (MET) Designated as Systemically Important Financial Institution; Issues Statement
- American Apparel (APP) Said to Get Takeover Offer at $1.30 - $1.40/Share - NYPost
When you wake up Monday morning and find Apple's (NASDAQ: AAPL) share price below $100 per share don't be alarmed. Apple's much anticipated 7-for-1 stock split will be effective after the close of trading today and start trading on a split-adjusted basis on Monday. Shareholders of record will receive six additional shares for each share held on June 2, 2014.
While a stock split does nothing fundamentally, psychologically the lower price could bring in fresh buyers. The last time shares of Apple were below $100 per share was May 2, 2007.
The stock split was one of the reasons cited by Bernstein analyst Toni Sacconaghi in his recent price target hike to $700. He said the split could broaden retail interest and psychologically make it easier for stock price to climb (e.g., $90 to $100, vs. $625 to $700). "Historically, our analysis points to evidence that companies that split their shares outperform in the near-term," he said.
In addition to the psychological benefit, the split could also open up Apple to the Dow 30.
Because the Dow is a price-weighed average, having a nearly $700 stock in the Dow is not feasible. With the split moving the stock price below $100 per share, an addition is now entirely possible. In April, when StreetInsider.com reached out to S&P Dow Jones Indices Director & Global Head of Communications about the matter, were were told "We cannot comment on the potential for any company to be added to or removed from our indices. We consider this material, market moving information." The key is 'market moving'. An addition to the Dow would clearly be market moving for Apple.
So while the split changes nothing, it also changes everything.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Retail, A Less Often Discussed Oil Trade (SBUX) (NKE) (TJX)
- Apple (AAPL) Bear Case $81, Bull Case $151; Goldman Sachs Reiterates Buy Rating
- UPDATE: Apple (AAPL) Prevails in $1B iTunes Trial Over Digital Music
Create E-mail Alert Related CategoriesInsiders' Blog, Stock Splits, Trader Talk
Related EntitiesStandard & Poor's
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!