More Shoddy Journalism 🔗Apple, Inc., posted its quarterly earnings on Wednesday after market close, and the numbers were so good that the stock was driven to an all-time high in extended hour trading, climbing above $100. A split adjusted all-time high, that is.
However, countless publications and news services are reporting that Apple shares crossed $100 for the first time in the company's history. "Apple shares breached $100 for the first time in the computer maker's history last night," said the Times Online.
The problem is, all of these news stories are wrong.
Apple shares breached $100 back on December 1, 1999 (closing at $103.063 that day), and continued to spend the first few months in 2000 above $100 -- climbing as high as $144. The stock had a 2 for 1 split on June 21, 2000 (and again on February 28, 2005). In a 2 for 1 split, the value of a share is halved, and the share owner is given one extra share of stock for each share s/he owns. So, if I own 100 shares and the stock is trading at $50 per share, after a 2 for 1 split I will own 200 shares, and the stock will trade at $25 per share. The net effect is zero; a split doesn't make shares any more valuable, but companies will sometimes split shares to lower the individual share cost, as many investors (emotionally) view lower-priced stocks as more "affordable."
So, yes, Apple shares hit a split-adjusted all-time high yesterday evening. But it was not the first time they crossed $100. Perhaps the effect of splits is too confusing for some journalists to grasp, or maybe they don't want to confuse their readers but can't resist the allure of the statement "Apple shares cross $100 for the first time." But that statement is patently false, and few of these articles are clarifying that this milestone is on a split-adjusted basis.