Technology company Apple Inc. (NASDAQ: AAPL) has generated strong growth in the stock market this year, with its share price up 44.74% since January. Trading at just over $425 when the markets closed on Friday, the stock was starting to look out of reach for some investors.
The company, seeing an opportunity to make investment more accessible, has now announced that it will split its stock. This will increase the number of shares available and bring the price closer to an investor-friendly figure.
More Than Just a Reshuffle
Some analysts have called the stock-spit a “non-event”, pointing out that it won’t change much for existing investors.
Apple will create a four-to-one stock split, lowering the overall price, and creating four shares from every share available today.
Taxable income won’t change for shareholders, but it will make the stock more attractive for new investors, and that’s what’s most important today. If the stock is trading at a similar price when the split is enacted later this month, a single share will cost just over $100.
Looking at the months ahead, this could raise the overall market capitalization as bargain-minded investors will be more likely to engage with the stock.
What Triggered the Apple Stock Split?
With a 52-week low of $192.58, Apple’s stock has grown significantly over the last year. The Coronavirus Pandemic has done little to impact the business, and some investors have viewed the stock as a kind of safe haven against market volatility.
Apple has decided to split the stock purely to make it more attractive to new investors. With the company’s most recent fiscal report, demand is high.
During its quarterly earnings call on Thursday, Apple announced revenue of $59.7 billion, an 11% increase over the previous year. Earnings per diluted share were up 18% at $2.58.
Record growth was achieved in both products and services. Mac and iPad revenues were up significantly. The company is preparing to release a 5G-enabled iPhone later this year, which could help drive revenue even higher over the holiday season.
Apple is a powerhouse technology company with one of the world’s most recognizable and desirable brands. Investors who have considered this stock but shied away from the high price of entry should consider their options when the split happens later this month.
The stock is a compelling growth option and with a 0.77% dividend yield, there’s even some income available.
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