Did you miss anything on Apple share price and stock split?

Summary

• The much-awaited 4-for-1 stock split of the Apple stock to make it “more accessible to a broader base of investors” had whet investors’ appetite on 31 August 2020, the day when Apple’s shares trading commenced on a split-adjusted basis.
• The Company had garnered the attention of investors, and Apple’s shares closed the day’s trade at US$129.04 on 31 August 2020, indicating an uptick of 39 per cent from the previous close of US$499.23 (pre-split price) on 28 August 2020.
• Apple, a company with a market capitalisation of over US$2.29 trillion (as on 1 September), has been sweeping the market, with its massive growth trajectories and soared earnings.
• Despite COVID-19 headwinds, Apple noted a record June quarter primarily due to double-digit increase in both products and services, as well as growth in all its geographic segments.

Amid COVID-19 market mayhem, the prominent technology companies (i.e., Facebook, Amazon, Apple, Netflix, and Alphabet) constituting FAANG family have been talk of the Wall Street. If one must say, the tech market darlings, FAANG stocks are together the core of modern technology sector that deliver innovative technologies, products and services.

Also read; Technology Space in the face of COVID-19; Investment Tips for Tech Stocks

Notably, one of the FAANG companies, which is renowned for its massive progress trajectories and soaring earnings multiples, Apple Inc. (NASDAQ:AAPL) has witnessed an uptick of 3.39 per cent in its share price and closed the day’s trade at US$129.04 on 31 August 2020 from the previous close of US$499.23 (pre-split price) on 28 August 2020.

Also, on 1 September 2020, Apple share price settled the day’s trading session at US$134.18, up by 3.98% from its previous close.

Do watch; What is happening with Apple Shares?

The soared share price of Apple was ascribed to the iPhone and Mac giant’s four-for-one stock split that garnered the attention of investors and noted enlarged buying of Apple’s shares.

It is worth noting that Apple's market capitalisation has surged more than US$2 trillion, and it has surpassed Saudi Aramco as the world's most valuable public listed company.

Did you read; What is driving Apple to Hit All-time High? Rub-off on ASX 200 Tech Stocks?

There might be numerous questions popping up in your mind concerning why the Company undertook stock split? How does this 4-for-1 stock split actually work?

Let us skim through each of these questions one by one.

Undertaking of Stock split

Apple has opted for a stock split to spur further gains by making its stock more accessible to a diverse range of investors.

Noteworthy, Apple had undertaken stock splits in the past as well, and most recently, it undertook the same in June 2014 on a 7-for-1 basis. The recent 4-for-1 stock split was Apple’s fifth stock split since its listing in 1980.

Effective dates of the split

There have been three key dates this year:

The Record Date – 24 August 2020 determined which shareholders were entitled to secure additional shares owing to the split.

The Split Date – 28 August 2020 represented shareholders whose shares were due for a split after the close of business on the same date.

The Ex Date – 31 August 2020 was established as the date when Apple common shares traded at the new split-adjusted price on the technology bellwether index, and Nasdaq Composite index.

Do read; Tech boom & FAANG Stocks: Investors look for another wave of high stock price levels

The way 4-for-1 stock split functions

A 4:1 stock split made sure that equity investors of Apple, as of 24 August 2020 received three additional shares for each share held. Furthermore, Apple’s shares officially started trading at the new split-adjusted price at the opening of Nasdaq’s trading session on 31 August 2020.

Moreover, Apple had first announced its plan for the stock split on 30 July 2020 in its earnings report for 3Q FY20 ended 27 June 2020.

Did you read; Apple Announces 4 for 1 Stock Split, Posts Record Quarter Despite Pandemic Disruptions

Apple’s financial performance

On 30 July 2020, Apple’s quarterly results for the third quarter ended 27 June 2020 were published, and the Company reported robust revenue growth of 11 per cent (pcp) to US$59.7 billion.

The swelled revenues echoed double-digit growth in products and services, as well as growth in all its geographic segments.

Furthermore, Apple’s total net sales in the services segment and wearables, home and accessories inflated to US$13,156 million and US$6,450 million for Q3 FY20 versus US$11,455 million and US$5,525 million noted in Q3 FY19, respectively.

Following are some of the other Q3 FY20 highlights:

• Earnings per diluted share noted inflation of 18 per cent and was recorded at US$58.
• International sales comprised of 60 per cent of the Q3 FY20 revenue.
• Operating cash flow of Apple stood at US$16.3 billion.
• Total cost of sales for Q3 FY20 was US$37 billion, delivering a gross margin of US$22.7 billion on total net sales of US$59.7 billion.
• Furthermore, Apple’s Board of Directors had declared a cash dividendof US$0.82 per share of the Company’s common stock.

As per Luca Maestri, CFO of Apple, the June quarter performance of the Company validated its ability to innovate, as well as execute amid difficult times.

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