Analysts, journalists and industry watchers have been praising Apple's decision to split its stock, but investment advisors at The Fool are sceptical about the news.
The report explains that shareholders on record on February 18 will get an extra stub for each one they already own. Total shares authorized will rise from 900 million to 1.8 billion. The stock will start trading on a split-adjusted basis on February 28.
Contributor Tim Beyers – the man who praised Apple for being a Rule Breaker – thinks that Apple's announcement that it will split its stock on February 28 is "a meaningless move".
He explains: "A stock split won't alter the overall value of the company. It will just create more shares and cut the per-share entry price for potential new owners in half. Oh, and by the way, the claim on Apple's earnings and cash flow for these same owners will also be – yep, that's right – half the size of those who hold stock as I write this."
Beyers concludes that the reason why the stock split is getting support is "because people generally like to own a few more shares, and they like lower per-share buy-in prices", but he warns: "Don't get suckered in. A split is absolutely never a reason to buy a stock."
According to Beyers: "February 28 won't change a thing. At least, nothing that's even the least bit important."