If you’re a stockholder for Apple, you will probably have heard about the split occurring Monday 8/31/20 before the market opens. The price per share closed at $499.23 on Friday so the opening price on Monday should be expected to be close to $124.81.
So, what’s a stock split and why? In a 1 to 4 split, it’s like giving 4 quarters in exchange for every dollar bill. The company’s market capitalization stays the same. But now it’s both more affordable per share for smaller investors. After all, if Apple has never split it’s stock since becoming a publicly traded company in 1980, it’s current price per share would be $28,000.
Today many trading platforms allow purchases of fractional shares so smaller investors do have the option to invest in companies they like that have expensive share prices. However, there are still some small drawbacks to not owning whole shares ( IE. Robinhood will not allow transferring of fractional shares to another platform).
Even with access to fractional share purchases, there’s a psychological incentive in having a lower price per share. Personally when I see the per share price of Berkshire Hathaway at $325,425, I don’t want to touch it. It just doesn’t feel good to drop $3,000 to own 0.9% of ONE share.