Apple announces stock split

Cameron Spencer/Getty Images

Apple announces stock split
(Image credit: Cameron Spencer/Getty Images)

In a move designed to make investment easier for small time investors, Apple announced a 7-for-1 stock split last night.

Each owner of a share in Apple, which is currently trading at around $570, will now own seven Apple shares, worth roughly $81 per share. That doesn't change the value of the company in itself. But it does lower the threshold at which someone can become an investor in Apple, at least a little.

Tim Cook explained the split as follows:

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We are taking this action to make Apple stock more accessible to a larger number of investors. Each shareholder of record at the close of business on June the 2nd, 2014 will receive six additional shares for every outstanding share held on the record day and trading will begin on a split-adjusted basis on June the 9th, 2014. [Seeking Alpha]

So Tim Cook wants to make investment in Apple more of an option for the people who buy iPhones and iPads.

Would lowering the threshold from $570 to $81 make a difference? For stocks with a very high price — like Warren Buffett's Berkshire Hathaway, currently trading for $191,000 a share — lowering the threshold makes the difference between a company being accessible to regular investors, or not accessible.

Berkshire Hathaway, for what it's worth, offers Class B stock currently priced at $127 a share — although B-class stock carries just 1/10,000th of the voting rights of the Class A stock. That is a big enough difference to make a difference, because not all investors have $191,000 to invest.

But the difference between $570 and $81 is pretty small by comparison. Even small retail investors building up a retirement account are usually looking to invest at least a few thousand dollars over the course of a year. So the only difference with this is really that the move sends the message that Apple is courting investment from the little guys. That may change the market's psychology toward Apple. Or it may not.

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