As you all may know, Apple will be splitting its shares 4 for 1 on August 31, 2020. This is the fifth time Apple has done this stock split, the last time in 2014 (7 for 1).
In this article, I’m going to talk all about the Apple stock split and the key dates to know. I’ve also covered in detail the division-related questions you might ask as well as other important information. Let’s get started.
Apple Stock Split – My Takeaway
Apple stock is currently worth around $460 per share.
Since Apple divides a share four to one, each share is worth approximately $115 (460/4) each.
However, the stock price continues to rise and is only expected to rise after the split, as many new investors will take advantage of the falling stock price.
A stock split is just a sale.
In other words, if I hold Apple stock now, my stock price will be split after the split. If I buy Apple after the split, it will be on sale and much more affordable for the average person.
This literally doesn’t fundamentally change anything for the title. It’s completely cosmetic.
People need to understand that you don’t benefit from a stock split. If you purchase a pre-share, you pay $450 for your stake. If you buy after the split, you pay $115 for a stake that is 25% of the pre-split size. You still have to spend $450 to get the same stake.
Apple stock split scenario
Consider this:
1 Apple share 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
Either way, you earn $450 on your initial investment.
If you bought after the split and only bought one share of Apple stock, sure, you’ll only pay $115, but when the amount increases by 100%, you’ll only have $230, not $920.
To have $920, you would still have had to buy 4 shares after the split and it would still have cost you $450.
The reason for a split is because if you only had $115 to invest before, you wouldn’t be able to do it because the smallest size you could buy is one share and that share costs $450.
Now with sharing it’s $115, so you can afford it, but it’s only worth 25% of what it was before.
It’s not like you get three shares for free.
It just opens the door to people who couldn’t invest before.
This is more obvious with a title like Amazon, where the price is $3,200. If they split 32:1, any investor with $100 can now buy a share of Amazon stock, which opens the door to many more investors and creates buying pressure, even though the company’s value hasn’t changed at all.
Key Dates for Apple Stock Split
Apple shares have split four times since the company went public. The stock was split 7 for 1 on June 9, 2014 and 2 for 1 on February 28, 2005, June 21, 2000 and June 16, 1987.
On July 30, Apple announced a four-for-one split and negotiations will begin on a split-adjusted basis on August 31, 2020.
According to Apple Investor Relations Pagehere are the key dates of 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 must split their shares after the close of business on this date. |
| 3. The date ex: August 31, 2020: date determined by Nasdaq on which Apple’s common stock 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 are issued for each share existing as of the record date of August 24, 2020.
Here’s an example: Assume that as of the record date (August 24, 2020), an investor owns 100 shares of Apple common stock and the market price of Apple stock is $400 per share, so the investment in Apple is worth $40,000.
Let’s also assume that Apple’s stock price fluctuates neither up nor down between the record date and the time the split actually occurs.
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 total value of the investor’s investment in Apple would remain the same, at $40,000, until the stock price rises or falls.
What happens if I buy or sell Apple stock 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 exemption date (August 31, 2020), you will sell them at the pre-split price.
At the time of sale, you will return 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 split of shares.
If you purchase 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 purchased shares.
Following the stock split, you will receive (or your brokerage account will be credited) 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 reflecting the split will be deposited into your account within days of the split date (August 28, 2020).
Contact your broker if you have questions regarding timing.
If you own a stock certificate or hold your shares directly with Apple’s transfer agent, Computershare Trust Company, NA, the shares after the split will be deposited into a book-entry position and Computershare will mail you a statement showing the number of shares you own after the split.
Apple will not issue new stock certificates. If you have a physical share certificate, there is no need to return it. You will be credited with the fractional number of shares in book-entry position.
My shares are held by a stockbroking company. How will my shares be adjusted based on the stock split?
You don’t have to do anything.
If you hold shares in a brokerage account, the additional shares will be deposited into your account to reflect the split within days of the split date (August 28, 2020).
Contact your broker if you have 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 future earnings per share (EPS) calculation?
At the time of the split, the number of shares in circulation will be multiplied by four and the 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?
Yes.
The number of shares outstanding and the number of shares authorized will increase simultaneously in order to maintain shares available for future issuance, as a percentage of shares currently outstanding, unaffected by the spin-off.
