I'm no professor in economics. I have a few years experience trading stock options, however. So I know a little something. Let's say you own one share of stock that's worth $1 in my company called, "Action!" Let's then say that we commit to a stock split 2 to 1. That's 50% or cutting the shares in half. Now you own two shares of stock that are worth $0.50 a piece. The company doesn't go up in value and neither does your stock, at first. Now that you have these two shares this makes it more appealing for people who like cheaper stocks. This creates buying activity that can raise the price. Why did Apple split their stock?
There are a few rumors. One is that they wanted to get into the Dow Jones Industrial Average. Another is that they did the split to maintain high prices on their products. What they have said is that they want the stock to be more appealing for smaller investors. Their stock was trading for over $600 a share. Now it's under $100. What does any of this mean for the people?
A lot of people use Apple products. Although splitting shares isn't an evil thing to do in the business market. Another one of the rumors is that Apple is doing this to maintain high prices on their electronics. I believe it. Splitting stocks to the stimulate company value is not far from what a greedy giant like Apple would do. The fact of the matter is their bubble burst already. If they would shrink, up like a good company, that could let other companies enjoy some of that market share. This could stimulate a lot of local economies and the business market as well. These aren't things Apple cares about, unfortunately. Well if you'll excuse me I have to go charge my iPod. This is just one man's opinion.