If I currently have 10 Apple shares, what will happen after the split?
Is the value of each share expected to go up or down as a result of this?
Would now be a good time to buy? ( or, at least, better than last week before this was announced?)
Price is expected to decrease to 1/7 of previous level.
For the sake of the math, I'll use a 5:1 split.
Day 0: Company trading for $1/share with 100 outstanding shares -- Market cap = $100. They are offering $0.05/share dividends -- Total dividend = $5
Day 1: Stock split at 5:1
Day 2: Company trading for $0.20/share with 500 outstanding shares -- Market cap = $100. They are offering $0.01/share dividends -- Total dividend = $5
http://www.streetinsider.com/Dividend+Hike/Apple,+Inc.+(AAPL...
Options markets are where this has the most impact. In order to sell a covered call, I need to own at least 100 shares of a stock. A stock priced at $500 or higher (in the case of GOOG) makes it harder for a smaller investor to participate in the options market. Splitting the stock price makes it possible for a little guy to purchase options based on their stock holdings.
If you're looking right now, it's possibly because AH trading is much more volatile.
Will it go up or down? (EDIT: apparently "up" if afterhours is any indication.) Used to be, back in the dotBomb days, a split announcement drove the price up. Now remember from above that nothing has really changed. AAPL's market cap is still the same, there's just more shares out there. One thing that has changed is that Joe Sixpack doesn't need to drop $50K to buy a lot of 100 shares. But Joe doesn't drive the market, institutional investors do. And when Fidelity's mutual fund is buying $10,000,000 worth of AAPL, they don't care if the share price is $1 or $1000. So there isn't much rational reason for the price to go one way or another.
A split could be taken as "management thinks...". I don't know, could have some weight to it, could not. At the end of the day, as someone who has traded stocks for over 15 years and traded AAPL since about 2003 (yea, me! Mostly...), I'm not making any decisions one way or the other on this news. I'll keep an eye on AAPL for sure, though, just in case the market disagrees with me.
Would now be a good time to buy? No, yesterday was a good time to buy (that's okay, I didn't either) because it's up 8% in afterhours. Earnings are tomorrow, and never ever never buy AAPL the day before earnings (it almost always go down the next day). WWDC is coming up, so it could be "AAPL announcement means they'll soon own the $WHATEVER market. Buy!" or it could be "AAPL announcement shows that a post-Jobs Apple is doomed. Doomed!"
No offense, but if you have to have a stock split explained to you then you're probably not suited to trying to time the market on AAPL. Hell, I've been trading AAPL for over ten years, and I'm not suited to trying to time it (I've done it, and mostly come out ahead, but I attribute it to getting lucky and not to my 133t trading skillz). Just hang on to it, see how it shakes out, and if it hits a good price for you at some point, sell it. Or if it takes a dip (say, after earnings maybe?), buy some more. If it opens up 8% tomorrow morning, you might even consider selling what you've got. Then if it dips after earnings, buy some more then.
But I am in no way, shape, or form a financial adviser. My advice isn't even worth what you paid for it. For entertainment purposes only, do not under any circumstances make trades based on what some anonymous dumbass on the internet says, because we're a dime a dozen, and if I were so smart I'd be hiking the Cascades today and not working a day job.
I have a lot to learn, this much I know.
Then you're already ahead of most individual investors in the market. Hubris will lose you more money than anything else. Ask me how I know. :-) (Wishful thinking comes a close second to hubris, though.)
That's wrong. This announcement came as part of the earnings announcement - it is already out and they did have a great quarter (hence the 8% pop).
To another point, I would expect a slight appreciation from the stock split. Apple is one of the most traded retail stocks and affordability could certainly provide a bump to the stock.