Stock splits: What they are, why they happen and what they mean for investors


Apple announced in its third-quarter earnings call on July 30 that it had approved a four-for-one stock split. This would make the fifth time the iPhone maker split its stock — and the first time since 2014.

After Apple’s four-for-one split, shareholders will have four times the number of shares as before. The value of each share will be quartered, however, meaning that the value of a shareholder’s stake will remain unchanged. Apple stock closed at $438.66 on Tuesday.

Once a stock price decreases after a split, the theory goes, more investors will buy shares, boosting the price. Mathematically, the company’s overall market cap remains unchanged.

Many of us can’t afford to buy stock in Apple at the $400 mark but we might be able to get a few shares after the split when it goes down to $100+.