Why Apple Should Announce a Stock Split on Wednesday

January 21, 2013 (11:30 am)

I wholeheartedly agree with an opinion piece Nick Nansen posted this morning, called Time for Apple to show the love. “In my travels around the world and the United States,” Nansen begins “it has become obvious to me that the vast majority of Apple users do not own Apple stock. I always ask them why? The first answer from everyone is always the same, ‘I cannot afford it.’”

I remember spending the holidays with my parents, and watching them give gifts of Apple stock to friends and family. At the time, the shares were between $9-$25 (I know what you’re thinking, but they weren’t that cheap. They often gave more than one share!). It was a great gift – especially for those who enjoyed using Apple’s products. Not only would it eventually appreciate to over $700, but it had the added benefit of convincing those in their early- to mid-teens to start following the markets.

But that time is no more. Even after the recent 29% correction, a single share is far too expensive to make for a reasonable gift. But other than gifting, why does this very high price contribute to potential manipulation? It’s all about the shareholder base. Nansen suggests a 10-for-1 stock split, and I completely agree. This would allow all of Apple’s most devoted users around the world (which is now quite a sizable group) to buy their favorite company.

Instead of being at the mercy of institutional funds’ asset allocations and macro research, the shares would have a steady group of long-term holders. A group that fundamentally knows and loves the company they hold, and one that is not so fickle as to run away because of the Apple Maps debacle or a Samsung commercial. Additionally, a stock split would increase the outstanding stock “float” by 10 times. This would make it increasingly difficult to manipulate shares into options expiration.

Let us know what you think.