A look back at when Apple split its stock, giving seven shares for each one held by investors. The move, undertaken to make the company more nimble, proved to be a boon for shareholders.
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The History of Apple
It was on June 9th, 2015 when Apple Inc. (AAPL) first announced it would split its stock 7-for-1. This was a move that many investors applauded because it made the stock more affordable and thus, accessible to a larger pool of potential investors. It also had the added benefit of making Apple the first $1 trillion company in the U.S.
The Early Years
Apple was founded in April 1976 steve jobs Steve Wozniak and Ronald Wayne. The company began as a computer software design firm and eventually expanded into the development of consumer electronics. In 1981, Apple released its first personal computer, the Apple II, which became one of the most popular home computers of the 1980s.
In 1985, Jobs left Apple to found NeXT Computer, a company that produced high-end workstations for the business market. Wozniak also left Apple in 1985 to pursue other interests.
In 1986, Apple introduced the Macintosh, the first successful personal computer with a graphical user interface. The Macintosh turned Apple into a major player in the personal computer market and helped spark the PC revolution of the 1980s and 1990s.
The First Split
In June 1987, Apple completed a 2-for-1 stock split. The split adjusted price on the day it occurred was $41.50. If you owned one share of Apple before the split, you would own two shares after the split with a market value half of what it was before the split. A stock split doesn’t change the underlying value of the company, but it does make shares more affordable and therefore increases demand for the shares, leading to a higher stock price.
Apple has done four other splits since 1987, most recently in 2014. Each subsequent split has been a 2-for-1 split. The stock price has increased significantly since the first split, making each subsequent split less impactful in terms of percentage increase. The 2014 split adjusted price was $92.12. So, if you owned one share of Apple before the 2014 split, you would own two shares with a market value of $92.12 after the split.
Even though each subsequent split has been worth less in terms of percentage increase, Apple’s stock price has continued to go up over time, so each successive stock split has still been beneficial to shareholders.
The Second Split
Apple’s second split came on the heels of the release of the iPhone 6 and 6 Plus. Given the high demand for larger-screened smartphones, Apple decided to offer two different sizes to appeal to a wider range of customers. This was a big change from the company’s previous strategy of offering one standard size.
To accommodate the new iPhone sizes, Apple also had to make changes to its manufacturing process. The company began using a new type of screen technology that was more expensive and difficult to produce than the screens used in previous models. This led to a shortage of iPhones at launch, which caused many customers to be unable to pre-order the new devices.
To make up for this, Apple offered a $100 credit to customers who were unable to get their hands on an iPhone 6 or 6 Plus at launch. This was a rare move for the company, which typically does not offer discounts or promotional deals on its products.
The second split was also notable because it was the first time that Apple stock had split since 2005. The stock had previously been trading at around $700 per share, but after the split, it dropped down to about $350 per share.
The Impact of Apple’s Split
When Apple split, it was a turning point for the company. Some See it as a move that saved the company while others see it as a move that ruined it. Let’s take a look back at when Apple split and the impact it had.
On the Company
When Apple Inc. announced a 7-for-1 stock split in April 2014, it made headlines. And for good reason: It was the largest stock split in U.S. history.
The move sent Apple’s already high-flying stock even higher. But the true impact of the split is best measured not by its effect on the stock price, but by its effect on the company itself.
The split had no direct impact on Apple’s bottom line. But it did make the company more accessible to a wider range of investors, which could ultimately lead to more money flowing into the company and driving up its stock price even further.
Split-adjusted, Apple’s shares are up more than 1,700% since the split was announced, making it one of the best-performing stocks of the past five years. If you had invested $10,000 in Apple just before the split was announced, your investment would be worth more than $177,000 today.
A lot has changed at Apple since the 2014 stock split. The company has launched several new products, including the iPhone 6 and 6 Plus, theApple Watch andthe iPad Pro. It has also entered new markets with its purchase of Beats Electronics and its launch ofApple Music.
And yet, despite all of these changes, one thing remains true: The stock split was a watershed moment for Apple that set the stage for years of incredible growth and shareholder returns.
On the Stock Market
In June 2014, Apple Split. The iPhone and iPad maker issued seven new shares for every one old share, at the rate of $92.69. This effectively halves the price of each share and doubles the number of outstanding shares. In the years immediately following the split, AAPL kept climbing, despite some turbulence in late 2014-2015 associated with the launch of the iPhone 6s/6s Plus (which was considered a “tepid” upgrade at best) and general economic headwinds in China. By early 2016 however, AAPL had returned to its post-split highs and then some, as strong sales of the iPhone 7 propelled it to become the first publicly traded company to ever be worth $700 billion.
In 2014, Apple split its stock 7-for-1. This move increased the liquidity of the stock, making it more attractive to a wider range of investors. It also had a significant impact on Apple’s earnings per share (EPS).
In the years following the split, Apple’s EPS grew at an impressive rate. In fiscal 2015, EPS was $9.22, up from $6.44 in fiscal 2014. In 2016, EPS was $9.67, and in 2017, it reached $11.62. That growth continued in 2018, with EPS reaching $14.09.
The split had a positive impact on Apple’s share price as well. From the date of the split through December 31, 2018, Apple’s stock price increased from $94.75 to $157.17, an impressive gain of 66%.
While the stock split made Apple’s shares more affordable and boosted the company’s EPS growth, it’s important to remember that these moves are separate from Apple’s underlying business performance. Thesplit simply made it easier for more investors to buy Apple shares and allowed the company to report higher EPS numbers.