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Apple Announces 2 for 1 Stock Split
neosar82 writes "Yahoo has a story about Apple's stock split. Apple Computer Inc. whose shares have almost quadrupled in value over the last year on the success of its iPod music player, on Friday said it set a 2-for-1 stock split, and its shares rose almost 4 percent. Under the share split, Apple shareholders of record at the close of business on Feb. 18 will receive one additional share for every outstanding share held. Apple said trading will begin on a split-adjusted basis on Feb. 28."
For over a year I've been thinking of how I should buy stock in Apple... A year ago it was going up and I thought they had a good short-term future prospect but I never got around to buying stock. Guess thats what happens when you're a poor college student. Dammit!
[insert lame joke here]
generate wealth. It just allows people to buy shares at a lower price. Stock splits are overhyped.
Share splits:
Before share split: 50,000 shares own a company. Compant has $1m earnings, makes $20/share earnings
Stock splits 2:1 but company fundamentals stay the same (simplisitc, but no reason splits affect the earnings of a company).
,br> Company still earns $1m. But not t has 100,000 shares that makes it $10/share. If shares are values on a fundamental basis it makes no difference. If shares are viewed on a tachnical basis (see technincal analysis, the opposite of 'fundamental analysis') it also makes no difference as price charts auto-adjust splits.
The reason share prices may react positively to share splits is because it increases lqiuidity in shares (lower prices making them more accessible to small-time retail mom-and-pop investors who may just buy 1 or 2 shares, though this is less so in an era of mutual fund saving), or as ait signals to investors that management are tuned into them - just a communication/signalling mechanism. It may also trigger second-thing-n guessing of other investors betting against each other's reactions, but this is market-situation rather than company speculation.
Share splits are the result of good news and really not good news in themselves.
...let's hope they don't find a worm inside.
Or even worse, half a worm.
(I know, I know, corny old joke... but I just couldn't resist!)
About 2-3 years ago I almost convinced myself that I should buy Apple stock. At that time, each share cost about 16 bucks...
I didn't buy any, thinking that I was maybe being a victim of St. Steve Job's reality distortion field (I'm as big an Apple fan as you can get) and that maybe the stock would plunge. After all, we were stuck with that damn G4. (And it kinda feels strange to buy stock when you're still in high school.)
Then iTunes Music store came out of nowhere. The stock litteraly exploded. Still didn't buy, thinking "economics 101: buying when high (the price, not me
Now the stock is at 81 dollars, that's a 65 $ increase per share, damnit. And yaknowhat? I still won't buy, cause I really don't see how it would rise again?! Maybe if Apple announces OS X for PC (see "Fortune" article). Maybe if they sell half a billion mac minis. Maybe if someone finds out that the iPod shuffle solves cancer, AIDS and world hunger. Maybe.
Anyways, it sort of confirms what I always thought about stock markets: those fucking "analysts" are on crack all the time. I mean, that Apple stock was vastly underrated three years ago. Now it's completely overrated, Apple is in good shape and all, but it's simply not that worth! There's no way in hell Apple is worth 72,9 BILLION dollars (900 million shares @ 81 dollars. I know, I'm vastly oversimplifying, but still...)
Hello! I'm a disaster waiting to happen!
The main reason the stock is this high is RDF. Fanboys don't just buy Apple products, they buy Apple Stock too. I mean, the iMac G5 and Mac Mini are certainly OK machines, but they don't fundementally change Apple's outlook in any way. (Best case is their 10 year long marketshare collapse actually stops.)
That was about 3+ years ago, at one of Apple's low points. The stock has about quintipled ($10/80). OSX was so clearly in the right direction, albeit broken that it was indicitive of good things (iPod,Mini, Xserve clusters, etc.) of things to come.
There formula for success is the same as google's. Build an efficient user-experience over a solid backend.
There's no way in hell Apple is worth 72,9 BILLION dollars (900 million shares @ 81 dollars
You're right, they aren't. They are only worth half that. Apple's market cap is currently at 33.18 Billion (408 million shares at ~$81).
Splitting your stock doesn't affect your market cap. When the stock splits the price per share will be halved. So they will still be worth 33.18B (816 million shares at ~$40.50).
heh heh heh I picked up a handful of shares for pocket change before the previous stock split in 2000. My only regret is that I didn't buy more, of course, I was only a college student at the time....
...and now I have 2! AHAHAHAHAHAHHAAHA! Love, Mister Funnypants http://www.deadtroll.com/
"Immature artists borrow. Mature artists steal."
Wes Borg
Note to self: You already have enough Macs. Next time, buy stock.
Village idiot in some extremely smart villages.
Heh. I bought 400 shares in Nov 2000 for $19 1/8 .. this was just after the bubble popped.. Apple was $50-60 per share during the bubble [actually $100-$120 because apple did a split in mid-2000, I'm adjusting for the split].
:-( The powerbook is nice though. :-) IEV is unchanged. :-|.
Watched it float around $20 for a long time.. then it started going to $25.. $30..$35.. decided "that's about what apple is worth, I'm glad Wall Street finally realized how good a company it is".... and I sold it all. Used the proceeds to buy a 17" powerbook (business expense!) and invested the rest in IEV (Europe S&P 350 ETF).
Thought I was pretty smart, for about 2 days.
I could be sitting on $32,000 right now.
I still think apple is worth about $40/shr though ($20 after the split), but I'm going to be kicking myself until it comes back down. IF it comes back down. You never know.
Yeah I know, don't complain... but I rarely ever sell stock. I'm a buy-and-holder. This is more proof that if you believe in a company, and you don't have a better place to put the money, STAY PUT.
unless Apple starts to pay dividends, the split means very little to me. Give me my cut and I'll be a quite happy after the split.
Damn beleaguered company...
'Nuff said.
OK, maybe it's not. Let us all try to remember the number of times that adjective was used to describe the company. I don't think I can count that high. And yet...yet there are STILL nay-sayers...
"He uses statistics as a drunken man uses lampposts...for support rather than illumination." - Andrew Lang
Anyways, it sort of confirms what I always thought about stock markets: those fucking "analysts" are on crack all the time.
I started playing the market decades ago. I realized early on that analysts are good at picking stocks after the stock moves. Do you own research. My tip for you: Buy companies that have no debt.
Two years ago, at AAPL's low of $14.25, here's why it was screaming buy:
1) Cash per share at around $11. That means you get the rest of company for $3 a share.
2) No debt (see above).
3) Not selling a commodity product.
4) Not dependant on other people's technology. Unlike HP, Gateway, etc.
5) Better brand loyalty than any other product except for cigarettes.
6) Been down so long, everything looked like up.
All the analysts, at the time, had hold (i.e.sell it when you can) or sell (i.e. dump this sucker now!) ratings on the stock.
I'm no Apple-only fanboy (I use Windows, Linux, & Macs) but I'm really tired of the marketshare complaint. Porsche has very little marketshare too but no one says Porsche's outlook is poor because GM and Honda sell a gazillion cars a year.
[insert lame joke here]
I bought 45 shares at about $17 or so. But I closed the investment account and got myself a shiny stock certificate. Now I want to sell some of that off (enough, say, to get double my original investment, and hold on to the rest). How do I do it without getting all my profits eaten away?
I'm irritated that I bought at $23/share then sold a couple weeks ago at $73/share. Yeah, 200% profit, but I could have made it to 250% profit! Or more!
And yes, I'm entirely serious about this. The thing is, being me, it was only 20 shares. Still, an extra grand I didn't know I'd have a few years ago...best investment I've ever made. Well, best one I've made and cashed out already. The others are yet to be seen.
± 29 dB
No, no, there already are 900 million Apple shares on the market right now. After the split, there will be 1,8 billion shares.
Apple Announcement:
CUPERTINO, California--February 11, 2005--Apple® announced today that its Board of Directors has approved a two-for-one split of the Company's common stock and a proportional increase in the number of Apple common shares authorized from 900 million to 1.8 billion.
(IANASME: I Am Not A Stock Market Expert)
Hello! I'm a disaster waiting to happen!
OK, whatever. I was going by what a stock report site said. Their market cap is still ~33B and it still won't change after the split. The parent poster seemed to think that splitting stock caused market cap to double.
Just as the Mac Mini is enabling many consumers to finally get a taste of Apple excellence, a lower stock price will enable smaller investors to get on board.
It is the board of directors that okays the stock split and I would guess that they wouldn't want a repeat of what happened after the split in 2000 where it plummeted in value. Rather, it is likely that the board believes that there is real room for growth. For me this is a more reliable indictor than, as one poster put it, a bunch of "crack smoking" analysts.
I think Apple has the potential to provide real value to the consumer market. Not only with iPod, which is great, but with powerful, standards based, secure, trouble free machines. It is FreeBSD and a lot of clever and innovative engineering that has put them in this position.
Bought shares during Amelio's reign, when word got out that NeXT's OS was being considered as a replacement for Copland, and got used to Wall Street geniuses ignoring Apple. Believed that someday Apple's particular business values (innovation over commoditization) would pay off. Felt like a fool sometimes. Held on anyway, especially when Michael Dell said that Apple should close its doors, sell the assets, and return the money to its shareholders (bought more shares). Always bought and loved the products. Now? There's a place for everybody, Mr. Dell, including you.
*ANY* company's stock is not simply a measure of "what it's worth" -- it also includes expectations of what it might become. In the case of Apple's current stratospheric valuation, one might look at the current market share enjoyed by Apple in the personal computer world (around 3%), and wonder what if they were able to do there what they have done in the personal music player marketplace?
Let's suppose that J. Q. Publicus *is* approaching a tipping point with regard to frustration about virus/worm/adware crap. If that 3% market share were to grow to, let's say, just for purposes of illustration, 9%, then the earnings contribution by Mac sales will AT LEAST triple, due to manufacturing efficiencies, no additional development expenses, yada yada yada. Suddenly today's pricing of the stock doesn't look so extreme anymore.
That is a simple rationale. Others are based on the theory that the world market for digital music will grow A LOT -- and since Apple *owns* that market, their revenues will grow with it.
One is (or should be) always looking for instances of where the "efficient market" is out of step with reality. Many times, one is wrong. But the essence of investment theory is to search out, using various metrics (technical "analysis", Ben Graham's work on valuation, astrology, whatever works), these instances of where the efficient market isn't, evaluate the risk, take a position, and wait for reality to catch up.
Those who invest via the "driving throught the rear view mirror" approach are destined to run off the road and crash. To properly invest, one has to look ahead (as well as behind and side-to-side), and not drive faster than conditions dictate (i.e., if you leverage yourself to the hilt and can't react quickly enough to the potholes in the road...), and be cognizant that the road ahead (that would be the future) is almost always enshrouded in fog.
As to whether Apple is priced fairly today, it depends upon exactly what future unfolds for it.
BTW... I *did* buy back then (a bit later, actually), based upon valuations and the huge pile of cash Apple was sitting on. I'm still holding it, waiting to see where it will peak. I look for it to sell off a bit sometime this year, and if there are signs that the Mini Mac is selling strongly into the Windows domain, I'll probably buy some more. However, it could just as well turn out that Apple drops the ball and is unable to satisfy demand, or that the hoped-for demand never materializes.
If you can't identify market inefficiencies, or foretell the future with some degree of accuracy, stick to index funds.
Bad analogy because Porsche is financially linked to the huge VW group.
Obviously a mousebutton split is to follow. And Apple will never be the same. Mark my words.
This is...
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You are confusing "authorized shares" with "outstanding shares". I'll explain the difference.
In the corporation charter, there is a statement that the the company is authorized to issue x number of shares. The company is allowed to sell to the market any number of shares up to that number. Essentially, it is a license for the company to print its own money. The currency in this case is shares. And just like any currency, if you print too much the value of each share will go down. That's why shareholders have to approve any increase in authorized shares.
"Outstanding shares" are the subset of "authorized shares" that have already been sold to investors. Usually companies never issue anything close to the number of shares they are allowed to. (Red flag if they do.)
Market Cap = Outstanding Shares x Share Price
The way to think of stock is that it's like a currency with the price as the exchange rate.
Take some advice from an old timer:
Be happy with the profits you made and don't cry over profits you missed.
That's the way I'm looking at it - after all, it's money I didn't have before. I made money instead of lost, so there's not really anything to complain about.
± 29 dB
I think the stock will jump big time when we see the first episode of The Simpsons or perhaps a Pixar movie available on iTunes. It could be a great thing for people with Mac Mini's connected to their television. They've already got music videos on demand for free. It beats Netflix or Tivo. With Netflix I have to wait a few days before my DVD arrives in the mai where as with iTunes I'd wait about 30 minutes for my 230MB episode of Sex and the City. With Tivo I'd have to wait until Sex and the City was broadcast. (Hopefully I was paying my monthly Tivo bill so it would be easy to program the recorder.)
Don't take it the wrong way. I could cry me a river over profits I've missed out on.
One example: Back in 1983 or 1984, I bought Hitachi (HIT) at 28. After about year, the stock was floating in the 50's. I sold at 54. Not bad, almost a two-bagger. Two weeks later it was at 70. It finally topped out at 120.
It's easy to know when to buy. The hard part is to know when to sell.
I really want to know who the people are that are buying high, in order to afford us the opportunity to sell high. For as smart as a lot of people in the market are, there sure seem to be quite a few dumb ones too.
± 29 dB
Fund managers listen to analysts.
Remember the "Greater Fool Theory": You can always find someone stupider that you are to will buy something from you.
Eventually you hit the end of the chain. There is nobody stupider than you.
Stock splits are exactly that - a quick way to issue double that class of stock.
.then this is not the time to buy.
If Apple is trading at pretty close to the top of their market ( aside from Tiger and the new Apple Portable Campstove a/k/a a G-5 laptop and whatever the Mini turns out to be) and there doesn't seem to be any Insanely Great stuff in the pipeline. .
Buying at or around the split is buying "high" - however, if the Mini really does make significant inroads into the Wintel world or becomes a home entertainment center - then the split allows more shares to trade and trade volume could increase....and, share price might go up.
If you want to wager - well, the market odds are not as bad as a casino... most of the time (e.g. ENRON).
Stick with a well-diversified portfolio and enjoy the fact that the Bond market will beat Bush into line sooner or later over the deficits.
About 15 years ago, Apple stock was trading around $45 dollars and then a few things happened and it dropped to $35. I bought 100 shares, cause I thought it might go up again. I'll soon have 400 shares. There were a lot of better places to put my money, but I put it where my heart was. After 15 years, it's been an OK stock to have. It's been fun to ride and, overall, right now I'm getting about a 11% annual return.
Very nicely written!
Slashdot's first reaction to VMware
Presenting, the new Stock Mini!
-- I speak only for myself
Well, let's take Apple stock for example. Pick any time-frame over the last year and Apple stock would have been at a 52 week high. Today it's at $83, a new 52 week high. Yesterday it was at $81, also a new 52 week high.
Everyone is kicking themselves for not buying at 16, 20, 24, etc... But, if you bought at $60 you still would have made gains. So, who's the bigger dummy: The person who didn't but at all, or the person who bought at $60?
You don't buy a stock because "it's cheap". You buy it because you believe in the company, and you think that it's value will increase in the future.
So I got my kid a share of AAPL for her birthday just becuause via oneshare.com. The price was $32. Now her "one share" will be two.
Compare this to my stock portfolio which had apple stock from back in the day when I was in the market (hint: dot bomb). Got out of stock trading and liquidated my AAPL shares (along with whatever was left).
Does this mean my one year old is more financially savvy than me? Hmmm....
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I've been an Apple fanatic most of my life. When I finally started earning my own money (about 1995), the first stock I bought was Apple. Ever since then I've been watching the stock and the company like a hawk. I was able to determine after a while when its peaks and valleys would be. I ended up buying a ton of shares at really low values and my average per share price is about $14 a share. There was a time when they hit a low of $12 and I was telling everyone I know to buy Apple stock. I just wish I bought a lot more.
Funny thing is that this music stuff took me completly by surprise. I felt that Apple's stock should be rising 2 years ago because finally at that point they had the best hardware and software they've ever had. Then the iPod came out and BAM! Now, I have no clue how Apple stock is going to move. I ended up selling some shares at $27, $30, $40, $50, and $70, wondering at each time whether that would be its new peak. I don't feel bad, as I have a lot more stock that I will be holding on to.
I've managed to make enough of a profit on these shares that it will significantly help me pay for a new apartment! I feel as if my loyalty to Apple as a customer and as an investor has paid off. It was only my devotion to keeping up to speed on everything Apple that I attribute to this success. It just goes to show you that someone with the incentive to become well versed in a company can be as successful than professionals. They are looking at almost the same information that is available to the rest of us. We just don't have the time to do the research normally.
Anyway, I'm rambling. Just wanted to let you know that Apple fans may not only be rewarded with the best computers on earth, but also with cold hard cash too! Thanks Steve!
I never bought any Apple stock, but I did buy $2000 worth of CSCO stock for $74/share one month before the bubble burst. Double sigh.
And that was my brief foray into the stock market....
A sentence you'll never see on an Internet discussion board: "You know what? You're right."