Apple is apparently eyeing a stock split, according to Bernstein analyst Tony Sacconaghi. He sees that as a real possibility because his sources say the Mac, iPhone and iPad maker is currently investigating the option.
“Our belief is that there’s a reasonable likelihood that Apple will split the stock. We’re confident that the company is looking at that topic and that they’ve started soliciting input on that topic,” Mr. Sacconaghi told CNBC. “That last time they solicited input from investors was on the dividend and in short order we had one.”
A split would make Apple’s stock more affordable since the price would be lower — at least initially. Using a split to lower the stock price would also open the possibility of bringing the company to the Dow Jones stock market index.
The Dow currently tracks companies such as Wal-Mart, Microsoft, General Electric, Bank of America, and AT&T, but so far has been closed off to Apple because of the relatively high price of its stock compared to other companies. Adding Apple to the Dow index would also mean bumping another company off since the list is limited to 30 businesses, and could also add an unwanted element of volatility to the index.
A stock split may look enticing to investors, but that doesn’t mean Apple will chose to do so just to make its shareholders happy. Unless the company sees real value in making the move — which doesn’t necessarily include the possibility of joining the Dow index — then a stock split simply won’t happen.
Apple hasn’t openly said that it is considering a stock split, but the company’s secretive nature often means it considers strategic decisions without telling the public or analysts.
Mr. Sacconaghi expects Apple could initiate a stock split within six months.
Apple is currently trading at US$620.67, up 3.46 (0.57%).