The tech giant stunned the finance industry yesterday by announcing it will split its stock for the fourth time in the company's history.
Just a month after Google announced their first ever stock split Apple has surprised Wall Street by revealing their most aggressive stock split in the companies 38-year history.
The seven-for-one stock split will take place start on June 6th and will see every single current share split up into seven smaller and less valuable shares.
Current investors need not worry though as the value of their holdings will not change, what will change is the share price of the individual stock, which will decrease around 7 times.
Apple's current stock price is 8% up at this very moment and is trading at a price of $567. If Apple's stock was trading at that price or somewhere in that region the day before the seven way split; on the split is completed, the 9th, the price of a share would divide by seven. This means an individual share would then be worth approximately $81.
Cheaper stock means it will more accessible and affordable for more people, this in itself could raise the price of the new smaller share.
Currently one single share in Apple is worth approximately 1/825-millionth of the business. After the divide a single share will only be worth around 1/5.8-billionth of the fruit company's business.
Apple CEO Tim Cook said in yesterday's earnings call that the split was going to "make Apple stock more accessible to a larger number of investors."
He also announced that Apple is set to increase its share buy-back scheme from $60 billion to $90 billion.
Cook said: "“We are announcing a significant increase to our capital return program. We’re confident in Apple’s future and see tremendous value in Apple’s stock, so we’re continuing to allocate the majority of our program to share repurchases."
This move has delighted Carl Icahn who is rumored to have around $3 billion worth of AAPL shares. Shortly after the earnings call he tweeted:
"Agree completely with $AAPL's increased buyback and extremely pleased with results. Believe we’ll also be happy when we see new products."
Which was shortly followed by:
"As we said at conference yesterday, we continue to believe $AAPL remains meaningfully undervalued. Many analysts fail to understand company."