Apple shares shot up more than 3% Monday following a 4-for-1 stock split that took place after the market closed Friday.
This morning, every Apple shareholder who owned one share at Friday’s closing price of $499.23 owned four shares, each with one-quarter that value ($124.81). After soaring as high as $131 in trading Monday, AAPL closed at $129.04, up $4.23 (3.39%) for the day.
Apple announced the stock split at its last earnings call in July. It comes shortly after Apple became the first publicly traded U.S. company to be valued at more than $2 trillion. Apple currently has a market cap of $2.13 trillion.
Companies divide their existing shares into multiple shares to lower the trading price of the stock. This psychological move can bring it down to a level more comfortable to most investors, as well as increasing liquidity (how quickly shares of a stock can be bought and sold without it having a big impact on the share price).
Apple’s stock-split history
Investors (especially low-level ones) will sometimes jump on share splits as a time to buy because it is suddenly more affordable to buy shares. But, as explained above, it doesn’t make it intrinsically better value. And overall market cap (the total number of outstanding shares multiplied by the share price) stays exactly the same.
Apple shares have split several times before. In June 1987, there was a 2-for-1 split. After this, Apple shares split 2-for-1 again in June 2000. There was yet another 2-for-1 split in February 2005. The most recent split took place in June 2014. This was a 7-for-1 split, the first in Apple history. At the time that split happened, AAPL stock started trading at $92.