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As a trend-setter, Apple Inc. (Nasdaq: AAPL) is used to being copied.
Once common, stock splits have become increasingly rare over the past decade or so, as companies began to view a lofty stock price as a mark of prestige.
But the dramatic 7-for-1 AAPL stock split, which became effective today (Monday), has dropped the price of one of Wall Street's most popular stocks below $100 a share.
The Apple stock split follows two other high-profile stock splits this year.
In January, MasterCard Inc. (NYSE: MA) did a massive 10-for-1 split, chopping its price from $818 a share to $81.85. And Google Inc. (Nasdaq: GOOG, GOOGL) did a 2-for-1 split in April, dropping it from $1,125 per share to about $570.
And while it's true that a stock split delivers no real benefit to the company or to shareholders, the psychological impact on retail investors tends to be positive, as many perceive that a stock that is split is somehow "cheaper."
"People love this idea they're getting more shares of a stock for nothing, even though the stock price is split by the exact same amount, so the value of their holdings is identical," USA Today market reporter Matt Krantz said on Yahoo Finance's "The Daily Ticker." "I can't tell you how many times people ask me 'what's going to be the next stock to split?'"
Why the Apple Stock Split Has All Investors Excited
One the reasons that the AAPL stock split – along with Google's and MasterCard's – has stirred interest beyond the shareholders of those companies is that it suggests a shift in corporate thinking more amenable to stock splits.
The aversion to stock splits is only a recent phenomenon. Back in the 1990s and earlier, stock splits were almost expected when prices got to $100 or more.
The idea historically was to maintain appeal to retail investors. That's the reason Apple Chief Executive Officer Tim Cook cited when he announced the Apple stock split.
Less than 20 years ago, between 1997 and 2000, there were 375 stock splits, an average of about 94 per year. Even after the markets recovered from the dot-com bust, the average in the mid-2000s was only about 35 per year.
The financial crisis of 2008 knocked that annual average number of stock splits down to the teens – where it has stayed despite a stock market rebound that has pushed the major indexes back to all-time highs.
The hope is that now that such marquee names as Apple, Google, and MasterCard have taken the stock split plunge, more companies will follow.
And there is no shortage of stock split candidates…
Seven Companies Due for a Stock Split
To keep things simple, we ran a screen for the seven stocks with the highest prices that also had an average daily volume of 50,000 shares or more. All of these stock trades over $300 a share.
If the Apple stock split does succeed in putting splits back into vogue, these companies are most in need of one:
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.