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Apple Announces Surprise Stock Split
During a third quarter earnings call with analysts, Apple Chief Executive Officer Tim Cook made the surprise announcement that the company's Board of Directors approved the stock split, which will take place in August.
Stock splits are cosmetic, meaning they do not change anything about a company's underlying fundamentals. They can lead to renewed interest from retail investors by making the shares -- which are cheaper after the split -- more affordable. Stock splits used to be quite common but occur less frequently today. Apple last split its stock in 2014, when the company enacted a seven-for-one split prior to being added to the Dow Jones Industrial Average.
In Apple's case, all investors who currently own the stock will receive three additional shares after the market closes on August 24. With Apple's shares trading around $400 today, the new price of shares will be around $100 when the stock begins trading on a split-adjusted basis on August 31.
In a news release issued after its earnings results, Apple said it approved the split to make "the stock more accessible to a broader base of investors."