When Apple announced as part of its latest earnings report that it would split its stock four ways as of the end of August, the company said the stock split was meant to make the shares more "accessible" to investors.
Stock splits, which have become increasingly rare, at least in the tech industry, are "something that a lot of companies probably should do pretty regularly," according to Nasdaq Chief Economist Phil Mackintosh.
With a stock like Apple, which has quadrupled in price since the last time it was split in 2014, a split does indeed broaden the company's potential investor base, Mackintosh said. The move doesn't change the inherent market capitalization of the company — it simply makes it cheaper for investors to get a piece — particularly the retail investors and day traders who have been flooding the online trading platforms like Robinhood.
At $100 or so, which is roughly the price of a single share of Apple after a four-way split at its current price, "it's probably the perfect stock price" for Apple, Mackintosh said. The split will make the trading spreads tighter, which he said is likely to keep intraday volatility down and help the price continue to go up.
Still, as Mackintosh noted, retail investors should look at stock splits as a way to build positions in companies with strong fundamentals that might have otherwise been out of reach; they should not change the calculus about whether the stock itself is a good investment.
Apple CEO Tim Cook said Thursday that the majority of iPhones sold in the U.S. in the current fiscal quarter will be sourced from India, while iPads and other devices will come from Vietnam as the company works to avoid the impact of President Trump’s tariffs on its business. Apple’s earnings for the first three months of the year topped Wall Street’s expectations thanks to high demand for its iPhones, and the company said tariffs had a limited effect on the fiscal second quarter’s results. Cook added that for the current quarter, assuming things don’t change, Apple expects to see $900 million added to its costs as a result of the tariffs.
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