With Apple now floating around $100 a share (though it closed lower today at $98.84), a stock split seems imminent. A stock split, which involves splitting the shares of a stock (and thus giving shareholders extra shares), and then decreasing the share price appropriately so the market cap of the stock says the same. Basically, this activity doesn’t increase the value of the company, but instead makes the stock seem more accessible to investors due to the lower share price. So, while the stock split itself doesn’t do anything to the actual value of the stock, the price usually rises immediately afterwords, as a stock split is a sign of an increasing stock price (meaning an increase in the company’s value).
So, why would Apple split now? Well, the last split, a 2:1 (meaning the number of shares double and their value is cut in half) in February 2005, was decided upon when the stock hit about $80. Now, with the share price above that, it would make sense for a split to occur again, especially considering great earnings from Macs, iPods, and now even Apple TV sales. Of course, Apple could just be holding out for the iPhone’s release, which could either bring a lot of profits or be a huge failure. So in the end, an Apple stock split probably is going to happen within the next several months.