APPLE STOCK SPLIT

Financial Education Series

Jul 31, 2020

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Today I am going to do something different - this won’t be permanent trust me (unless there is good feedback). I made a quick video explaining today’s lesson about stock splits and stock reverse splits along with some coverings yesterday’s huge earnings. Enjoy!

Not mentioned in the video:

$AAPL is more than likely doing this 4:1 stock split to stay in the Dow Jones Industrial Index. This Index (unlike the S&P 500 which is the market cap) is price-weighted so if a stock has too high of a price the pull or weight of the stock would drive the whole index. Apple as a company more than likely wants to stay in this index since many funds hold variations of it in their portfolio. Too high of a share price = cut from the index. For instance, Amazon $AMZN is not in the DOW for this reason.

In conclusion:

Stock splits at the instantaneous moment it occurs does not change the price or amount of capital in shares you own as a whole
More often than not there is a surge in price due to retail investor sentiment

Last but not least, I had a tweet go “viral” about Kodak $KODK stock. For those not aware, the stock went up over 500% the other day (more than 1,400% over a couple of days) due to news that it received over 700 million in government funds to mass-produce generic drugs. Yes, you read that correctly, a camera company is now shifting operations into a completely different sector.