The 2-for-1 Nike stock split date has arrived, and here's what investors need to know.
After the stock market close on Wednesday, Dec. 23, Nike will provide investors with two shares of Nike Inc. (NYSE: NKE) for every one they already hold.
The Nike stock split is payable to shareholders of record as of Dec. 9. Shares will begin trading at the post-split price on Dec. 24.
With the split, Nike shares will become much more affordable to investors. A 2-for-1 stock split halves the price of shares. That means Nike shares will trade around $65 post-split, based on today's midmorning session price of $130.
The deal will increase the amount of both Class A and Class B shares on the market. After the Nike stock split, there will be 353 million Class A shares and 1.36 billion Class B shares on the market.
This marks the seventh time in Nike's storied history it has split shares. The last Nike stock split was in December 2012. To date, all Nike stock splits have been 2-for-1.
While the Nike stock split will have the biggest impact on NKE shareholders, it will also have an impact on the Dow Jones Industrial Average...
How the Nike Stock Split Affects the Dow
When the Nike stock price changes on Dec. 23, Nike's weighting on the price-weighted Dow Jones Industrial Average will be reduced.
That means daily gains and declines in the index will also be reduced by the Nike stock split...
Created in 1896, the legendary blue-chip index is watched closely around the world because it provides investors with a benchmark comparison for their portfolios.
The index also facilitates comparisons of the past. Thanks to its large-cap multinational components, the Dow might indicate the future direction of the economy, according to S&P Dow Jones Indices.
The carefully curated 30 stocks that make up the Dow are selected for their economic importance and influence. Nike stock was added to the Dow on Sept. 10, 2013.
As of Dec. 15, Nike had a roughly 4.7% weighting on the Dow, Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, told Money Morning.
That makes Nike the sixth most impactful Dow component behind only Goldman Sachs Group Inc. (NYSE: GS), 3M Co. (NYSE: MMM), Boeing Co. (NYSE: BA), International Business Machines Corp. (NYSE: IBM), and Home Depot Inc. (NYSE: HD).
But after the split, Nike's Dow weighting will drop to roughly 2.4%. That will make it just the 21st most impactful name on the index.
Stock splits from the Dow 30 components have been infrequent over the last several years.
The Nike stock price has enjoyed a stellar 2015, with shares up 35% year to date. Over the last five years, Nike stock has surged more than 195%. That compares to a gain of just 54% for the Dow in the same time.
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- Business Insider: Nike Is Buying Back $12 Billion of Itself
- The Wall Street Journal: What Nike's Two-for-One Stock Split Means for the Dow