Apple (NASDAQ:AAPL) is instituting a 7-for-1 stock split in an effort to lower its stock price and bring in more investors. But does this really matter for your investments in the long term? The answer is both yes and no.
When a stock is split, you don't own any more or less of the company, so the fundamental value for long-term investors doesn't change. A lower share price can bring in new investors who view the higher share price as expensive, but it can also draw short-term traders to the stock. That's why Google's shares and Berkshire Hathaway's (NYSE:BRK-A)(NYSE:BRK-B) "A" shares have remained expensive; the idea is that more long-term investors will own the stock, rather than traders pursuing short-term gains.
Learn more in the following video.
Travis Hoium owns shares of Apple and Berkshire Hathaway. The Motley Fool recommends and owns shares of Apple, Berkshire Hathaway, and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.