Stock Splits: Win or Die Trying
- Apple eyes the finish line.
- Amazon has a trick up its sleeve.
- Who wins the race to a trillion?
- Also recommended: Amazon’s next “mark”?
Apple is in an epic drag race with Amazon.
It’s a race of historical significance, too.
At stake is the title of “first trillion-dollar company in world history.”
As it stands right now…
Apple is winning by a score of $788 billion to $494 billion.
The $304-billion differential could be the result of Apple’s 7-for1 stock split three years ago.
Let me explain…
Apple’s stock has split four times since the company went public:
- The stock split on a 2-for-1 basis on June 16, 1987.
- The stock split on a 2-for-1 basis on June 21, 2000.
- The stock split on a 2-for-1 basis on Feb. 28, 2005.
- The stock split on a 7-for-1 basis on June 9, 2014.
Yet Amazon’s stock has split only three times since going public:
- The stock split on a 2-for1 basis on June 2, 1998.
- The stock split on a 3-for-1 basis on Jan. 5, 1999.
- The stock split on a 2-for-1 basis on Sept. 2, 1999.
By virtue of its ambitious 7-for-1 split three years ago, Apple strategically made its shares much more attractive to investors. (The perception of being cheap has a psychological impact on investors.)
Now it’s Amazon’s move.
With shares running north of $1,000, will Amazon steal a page from Apple’s playbook and announce a similarly aggressive split? And if so, should you front-run the announcement?
The timing for a major split to happen feels perfect.
So I asked my senior analyst, Martin Hutchinson, to unpack stock splits for us.
Hutch’s full analysis is below.
Ahead of the tape,
Chief Investment Strategist, Wall Street Daily