Shares of Apple (AAPL) are jumping in midday trading after the company reported its first quarterly profit gain in almost two years, announced a 7-for-1 stock split – the tech giant’s first split since 2005 – and raised its dividend by about 8%.
But it’s that unusual 7-for-1 split that has investors scratching their heads. JMP Securities managing director Alex Guana, in an interview with Maria Bartiromo ahead of Apple’s earnings release, said, “Had Apple been intending to do a stock split, they had ample opportunity and should have done it a long time ago.”
Still, despite the somewhat unorthodox financial engineering, investors seem to like what they see and some are even expecting more splits in the coming weeks.
One stock of note is Priceline (PCLN). The online travel company is the only S&P 500 stock trading above $1,000 a share and hasn’t traded in the triple-digit range since last October – keeping it out of reach of some potential investors. On the heels of Google (GOOG), Mastercard (MA) and Apple all splitting their stocks – what are the odds Priceline will follow the trend?
“It’s not out of the realm of possibility,” according to Keith Bliss, director of sales and marketing at brokerage Cuttone and Co. “It certainly makes the stock more reachable [for retail investors].” Others share Bliss’s outlook for a potential Priceline stock split, with one trader adding, “it’s a natural progression … if you want the retail investors, you have to make the stock affordable.”
Some even expect the company may start to see pressure from existing shareholders over the lofty stock price, which could bring a split sooner rather than later.
But not everyone is convinced. Analysts at research broker ITG say there is nothing on the horizon to suggest a split is coming for Priceline, whereas Google and Apple were facing pressure from either shareholders or management.
Priceline reports its first-quarter earnings on May 8 before the market opens, and for a company advertised by William Shatner, investors-to-be may hope that the stock goes where others have gone before -- and split.