Apple will make a 4-for-1 stock split

The tech giant made an announce of a 4-for-1 stock split. How will it affect the stock price?

What happened?

Apple even outperformed Saudi Arabia’s oil company Saudi Aramco and became the world’s most valuable publicly traded company. For comparison, Apple’s market value is $1.84 trillion, while Saudi Aramco’s is $1.76 trillion. Also, Apple claimed that it would split its one stock into four on August 24.

What does it mean for trader?

The split-adjusted trading will start on August 31. It means the stock will cost 4 times less than now. For instance, if the stock price is $400 on August 30, it will slump to $100 on August 31. If you trade the Dow Jones Industrial Index, be ready for the sell-off as the DJIA is price-weighted. On the flip side, the market cap weighted S&P 500 will gain, if the Apple’s value continues rising. Why did Apple do that? To make the stock more accessible for greater amount for shareholders. Indeed, lower share prices should attract more investors.

However, it’s not the reason to consider buying Apple. The real cause, which can push its price higher, is the recent earnings report. It beat all estimates. The company’s revenue surged by 11% to $59.7 billion, that was 14% higher than the estimate. At the same time, earnings per share tuned out $2.58 — 26% more than anticipated. Actually, the coronavirus quarantine didn’t damage the company’s growth. In opposite, it helped to boost IPhones, Mac and IPads sales amid stay-at-home regimes.

Technical tips

Apple has made a huge jump above the key psychological mark at $400 on Friday. It set a new record high at $425. Most analysts have bullish prospects on the tech giant. However, if the price manages to slump below $400, it will open doors towards the next support at the $372 level, which it has touched several times already.

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Author: FBS Analyst Team

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