3 things to know about Apple’s stock split

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Apple Inc.’s stock price will appear a little lower Monday morning, but investors shouldn’t be concerned.
The smartphone giant’s four-to-one stock split officially took place after trading closed on Friday, and Apple AAPL,
-0,16%
predicts that this decision will make its actions “more accessible to a broader base of investors”. As a result of the split, Apple shareholders will hold four shares for each of them previously.

It is also a milestone day for Tesla Inc. TSLA,
-1,13%,
which conducts a five-to-one split after Friday’s closing bell and will see its stock begin trading on that new basis on Monday morning as well.
Here are three things to know about Apple’s stock split.

How it works

After Friday’s closing bell, Apple shareholders owe three more shares for each existing share of the company they own. This is applicable for those who were shareholders of record on August 24. Apple shares officially begin trading at the new division-adjusted price at the start of Monday’s session. Apple announced its plans for the split on July 30 with its latest earnings report.
Expect Apple’s share price to be around 75% lower when trading begins Monday morning following the split – shares closed at $ 499.23 on Friday, suggesting that they will open around $ 124.81, although after-hours trading and pre-market trades could affect this. While some systems may appear to record that Apple stock has in fact declined by 75%, historical records will eventually be adjusted so that past Apple stock prices are also reflected on a split-adjusted basis. .

Historical precedent

It is the fifth division of shares of Apple in its time as a public company. Apple did a seven-for-one split on June 9, 2014 and a two-for-one split on June 16, 1987, June 21, 2000, and February 28, 2005. If Apple had never split its shares, the shares would currently sell for. approximately $ 28,000 each.
With historical adjustments, previous events and prices will change. For example, Apple valued the shares in its 1980 initial public offering at $ 22 a share. After its first four stock splits, however, that price fell to 39 cents per share in the historical register, and it will drop again – to about a penny – after that split.

Shake the Dow

Apart from affordability, Apple’s equity division also helps align its stock price with its peers in the Dow Jones Industrial Average DJIA
+ 0,56%
, which is weighted by price. Trading just under $ 500 before the split, Apple was the biggest component of the blue chip index, but it will fall in the middle of the pack after the split as UnitedHealth Group Inc. UNH,
+ 0,86%
takes back the first place it occupied for part of the spring. Apple will have the 18th weight based on Friday’s closing price, according to Dow Jones Market Data.
Only seven components of the Dow Jones Industrial Average, including Apple, had stock prices above $ 200 before the split.
The Apple split also prompted S&P Dow Jones Indices to make changes to the rest of the index, thus priming some cheaper stocks. Pfizer Inc. PFE,
+ 0,13%,
Exxon Mobil Corp. XOM,
+ 2,39%,
et Raytheon Technologies Corp. RTX,
+ 2,20%
will exit the index before trading begins on Monday, with Salesforce.com Inc. CRM,
-1,88%,
Amgen Inc. AMGN,
+ 0,12%,
et Honeywell International Inc. HON,
+ 1,44%
taking their place.
Read: Why the Dow reshuffle is bad for stocks added to it – and less bad for those who started out
This is the second time in the past decade that the S&P Dow Jones Index Committee will trade three components at a time, and the third time this millennium.

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