The primary purpose of stock splits, for Apple and for other publicly traded companies, is to increase the accessibility of its shares for investors, according to The Economic Times. This may reflect the value of the company having previously appreciated to the point that share prices had become extremely high.Continue Reading
Shares of publicly traded corporations often appreciate considerably since their initial issuance, notes Investopedia. Simultaneously, investors with limited funds may be interested in purchasing an investment in a particular corporation, but have limited funds with which to do so. Prior to its 7-for-1 stock split in 2014, Apple shares had traded for just under $650, as reported by CNN. This made the stock unaffordable to some investors. By splitting the stock, Apple was able to reduce its per-share price considerably without affecting the overall value of the company. If Apple's price again appreciates to the point that it becomes unaffordable to a large number of individual investors, further stock splits are likely to occur.
Other factors include the fact that many companies desire to be included in the index of companies used in the Dow Jones industrial average, explains The Financial Post. Because of the calculation method used to determine the Dow's average, which results in greater weighting on companies with higher share prices, the Dow has generally aimed to ensure its index includes only stocks in a select range of lower values.Learn more about Investing