Apple Stock Division: Buy Now or Wait?

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The split follows a milestone for the iPhone maker: Apple’s market capitalization passed $ 2 trillion last week. In the following days, that number continued to climb to around $ 2.16 trillion on Monday, making Apple (AAPL) the most valuable stock in history after breaking Saudi Aramco’s record market cap of $ 2.03 trillion, which it hit in December.

Apple shows no signs of slowing down. Its highly anticipated iPhone 5G and opportunities in emerging markets are likely imminent.

Apple’s stock split process begins today after the closing bell. The company will register the current shareholders whose shares will be shared. Current investors will receive their additional shares after the closing bell on August 28, and the shares will begin trading at the new split-adjusted price on August 31.

Here’s what current and potential investors need to know.

Buy before or after the split?

Dividing the shares by four to one will not change the value of an investor’s total Apple stake, it will only increase the number of shares in that pot. So if a potential investor has a fixed amount that they want to invest in the business, it doesn’t matter if they bought it before or after the split.

Here’s an example: Assuming stock prices don’t move dramatically during the multi-day split process, if an investor owns two Apple stocks at $ 500 each before the split (a total stake of $ 1,000), after the split, he will own eight Apple shares at $ 125 each (still a total holding of $ 1,000).

The split is expected to make a difference for small individual investors who may not be able to afford a share of Apple at $ 500 apiece (currently it’s cheaper to buy an iPhone SE than part of Apple) but who could afford the lowest, shared post-price.
Apple closes above $ 2 trillion for the first time

As of Monday afternoon, Apple shares were trading around $ 505.

This is Apple’s fifth share split since its IPO. And the previous splits have been a hit with investors.

In June 2014, following a seven-for-one stock split, Apple shares were trading at $ 94. In one year, the stock price had risen nearly 37% to $ 129.

Can Apple continue to grow?

Apple is already a monster, but many Wall Street analysts expect it to continue its spectacular growth.

The main driver of future growth is the iPhone 5G, which is widely expected to launch this fall. The new technology, which will enable iPhones to connect to the next generation of super-fast wireless networks, is a major breakthrough that could cause a “super cycle” of consumers upgrading their devices.
The iPhone 12 feature that could help convince millions to upgrade their phone

“We believe that the iPhone 12 represents the most important product cycle for (Apple CEO Tim) Cook & Co. since the iPhone 6 in 2014 and will be another defining chapter in the history of the company’s growth. ‘Apple for the future,’ said Dan Ives, analyst at Wedbush Securites, in a note to investors earlier this month.

Improving 5G connectivity could also lead to greater adoption and use of Apple’s digital services, such as Apple Arcade and Apple TV +, which the company is increasingly relying on to diversify its sales. .

While expectations are high for new releases, older and cheaper iPhones could also play a big role in Apple’s future, according to Morgan Stanley analyst Katy Huberty.

The company’s iPhone trade-in program provides it with used devices that can be resold, typically in emerging markets, for a fraction of the price of new iPhones. In these markets, Huberty said, Apple has a much smaller market share than its positions in global and developed markets, which means it has significant room for growth.

Between the cheaper iPhone SE and the upcoming iPhone 5G, there is a growing incentive for owners of existing Apple devices to upgrade older devices, which expands the trade-in program.

Currently, Apple has an 8% market share in emerging markets, compared to 35% in developing markets and 15% overall market share worldwide. But by 2023, Huberty said she expects around 70% of Apple consumers to participate in the trade-in program, which could take Apple’s emerging market share to 15% and its share. global market share to 21% during this period.

That would mean a larger installed user base for Apple and possibly more consumers of its digital services and other hardware products, such as AirPods.

“The iPhone opportunity used by Apple and the resulting growth in the installed base helps to strengthen the company’s long-term growth profile,” Huberty wrote in a note to investors last week.

So what does all of this mean for potential Apple investors?

If you can afford it now, analysts believe an investment in Apple will continue to pay off.

Otherwise, Apple shares will be cheaper in a week’s time, and then you can participate.

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