stock split

Does the 7:1 split tempt you to buy more AAPL stock?

Yesterday Apple's stock started trading post 7-1 split. For every share that existed before there are now 6 new shares alongside it. If you owned 100 shares of Apple you now own 700 shares. Instead of the stock trading above $600 it now trades in the $90s.

Apple announced the split in late April alongside the Q2 results. At the time I explained how splits work and how they don't mean anything from a financial perspective. It would be similar to taking your giant slice of pizza and cutting that slice into 7 smaller slices. You'd still have exactly the same amount of pizza.

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Apple may split its stock and become a member of the Dow Jones Industrial Average -- but it doesn’t matter

There’s an interesting story over at Businessweek talking about the possibility of Apple splitting its stock price, and possibly even earning a coveted spot as one of the 30 stocks that make up the Dow Jones Industrial Average (DJIA). This is all due to a research piece that Toni Sacconaghi, the Apple analyst at Bernstein, published recently.

The gist of the story? Sacconaghi makes the interesting point that Apple is the only dividend-paying company with a market cap over $215 billion that isn’t included in the Dow. But if it were included in the index, its would command a large weighting. This is because the DJIA uses stock price as the weighting mechanism. The solution is for Apple to split its stock in order to improve its chances of being added to the index.

Other technology companies in the index include Cisco, Microsoft, HP, IBM and Intel. Given that Apple is not only the largest company in the world (by market cap), shouldn't it be included?

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