Apple's Stock Split History

Stock splits can stir up a lot of investor excitement. Apple (NASDAQ:AAPL) is a perfect example. Since the tech hardware leader went public more than 40 years ago, Apple has split its shares five times and created massive shareholder wealth.

Some investors get excited about stock splits because they believe they make the stock cheaper. A stock split occurs when the company issues new shares, and as a result, the price of each share goes down.

But the valuation usually remains unchanged since the decrease in stock price and increase in shares outstanding usually offset each other. There's no change to a company's market capitalization or enterprise value.

Much like the stock splits in Apple's early history, the company's stock splits in the 2000s and later were preceded by a run-up in stock price. Performance in the year after the split was respectable, too. After another 2-for-1 split in 2005, Apple divided its last two splits by larger amounts in 2014 and 2020.

However, more important than Apple’s stock splits is the business’s performance. Each time the tech hardware designer has split its stock, it has experienced strong growth in sales and profitability. The exception was in 2000 when sales dipped between the dot-com bust and the release of the iPod in 2002.

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The lesson: Companies such as Apple split their stocks for good reasons, which include managing stock-based compensation for employees, as well as share repurchase programs to return excess cash to shareholders. However exciting stock splits may seem, the real reason to buy and hold a stock like Apple long term is because of secular growth trends that benefit the company.