Apple Stock Is Now Trading for Less Than $100

Moneybox
A blog about business and economics.
June 9 2014 11:42 AM

Apple Stock Is Now Trading for Less Than $100

174288449-the-apple-logo-hangs-in-front-of-an-apple-store-on-july
Apple shares are now cheaper, just like some of their iPhone models.

Photo by Spencer Platt/Getty Images

Always wanted to own a piece of Apple but couldn’t wrap your head around paying upwards of $600 per share? Then today’s your day. The company's stock is now trading for under $100 after a 7-for-1 split. Meanwhile, if you owned 100 shares before, now you own 700 cheaper ones. It's kind of like the company just turned its equity into an iPhone 5C.

So, is today a good time to buy? Maybe! Who knows really? As Matthew McConaughey will tell you, picking stocks is sort of a sucker’s game for us mortals. But as I wrote when Apple announced its plan, there is some evidence that stocks do well after a split—one investment adviser has even created a portfolio of nothing but split stocks that has apparently outperformed the market for the past decade.

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It’s not that smashing one fat stock into many smaller pieces actually creates value. Rather, it may be a matter of self-selection. For various reasons, companies generally don’t like to see their shares trade too cheaply, so if they’re confident enough to split them, it may signal that management doesn't expect the price to fall any further, meaning good things on the horizon. For mysterious reasons, investors are bit slow to price that info into shares, which theoretically creates a buying opportunity. If, you know, you’re not content just to shove your savings into a boring index fund, like most of us probably should.

In any event, the stock split caused at least one amusing hiccup this weekend, when it briefly appeared that Apple had created a few overnight millionaires. Investors who checked their portfolios saw their stock holdings multiply by seven on Saturday, but the stock’s price didn't adjust until today. Fun while it lasted, I'm sure.

Jordan Weissmann is Slate's senior business and economics correspondent.

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