Apple regaining momentum after stock split
Even though the value of the tech giant's shares is the same, the price may finally be right for some investors.
Apple's (AAPL) investors are jumping for joy these days because the company, which seemed to have lost its way in innovation, is back on track.
There are many reasons to believe that Apple has started to recover its momentum.
First, on Monday Apple shares began trading at a new price following a 7-for-1 stock split. Apple executed the split in order to bring in more investors and create an attractive price. The company said, "We want Apple stock to be more accessible to a larger number of investors."
In an interview with the "Christian Science Monitor," Peter Cohan, adjunct professor at Babson College, stated, "There is a thought process that if the stock is trading below $100 a share it is inexpensive, which is why going "from three figures to two figures breaks a mental barrier."
The stock has flourished since Apple announced the split in April. Shares closed Wednesday at $93.86, up about 25 percent on a split-adjusted basis from before Apple announced the split, and up more than 18 percent for the year to date. At the same time, the company has been pleasing investors with its share repurchase plan, its acquisition of Beats Electronics and an increase in its quarterly dividend.
Apple-authorized stock will increase from 1.8 billion to a staggering 12.6 billion and Apple's outstanding stock from about 861 million shares to about 6 billion shares.
Then there's the Beats Electronics acquisition, in which Apple will pay a total of $3 billion for the headphone maker and music streaming service. This service is much like those offered by Pandora (P) and Spotify. Another reason why Apple bought Beats is investors and analysts were screaming for Apple to do something innovative again. This acquisition has enabled Apple to get back on track.
What's next? Possibly "wearable technology."
At the time of publication the author had no position in any of the stocks mentioned.
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