Apple’s stock price has surged past $500 on Monday, just days before the stock split. The stock traded at $370 per share only a month ago on July 24. Just like many other technology stocks, Apple has been on a wild ride this year. The stock tumbled to $225 on March 23 as the world went into lockdown. But it has more than doubled since then.
Apple has become the world’s most valuable company with a market capitalization of $2.15 trillion. On Monday, August 24, the stock opened at $501.74 per share. During its third-quarter earnings call, Apple had announced a four-for-one stock split, which is set to take effect on August 31. The stock split will make it easier for retail investors – especially those with small amounts of money – to buy Apple shares.
Apple’s shares have rallied approximately 70% since the beginning of this year. The stock plunged to $225 in March amid concerns that the pandemic and the lockdown would hurt its sales. But the Cupertino company exceeded all expectations for the April-June quarter.
The tech giant reported revenue of $59.7 billion for the June quarter, despite the pandemic. The revenue went up 11% compared to the same quarter last year. Most analysts were expecting a decline in revenue. The Wall Street consensus revenue estimate was only $51.47 billion. Its profits rose 25.9% YoY to $2.58 per share, beating the Wall Street expectations.
Morgan Stanley analyst Katy Huberty has an Overweight rating on the stock with $520 target price (before split).
Apple’s board of directors said the proposed stock split would “make the stock more accessible to a broader base of investors.” The Cupertino company had last announced a stock split in 2014. Billionaire Warren Buffett had invested $35 billion in Apple stock in 2016. His Apple holdings have since swelled to $126 billion. Buffett hasn’t sold his Apple shares.
According to Reuters, Apple’s market value is higher than the combined market cap of the 200 smallest companies in the S&P 500 index. Apple is the biggest constituent in the S&P 500 with around 7% weightage. It has an even greater weightage in the Nasdaq 100 index.
However, the Cupertino company is set to suffer a minor setback in the current quarter. During the June quarter earnings call, Apple told investors that the iPhone 12 release date would be delayed by a few weeks due to the COVID-19 pandemic. The tech giant typically launches new iPhones in September, but the iPhone 12 is unlikely to debut until October.