Doug Kass tweeted a rumor regarding a stock split coming at Apple’s shareholder meeting scheduled for tomorrow at the company’s headquarters in Cupertino, California. The stock has reversed course since Kass’s Tweet, moving from down $5 to up $5. Many observers, such as Fortune’s Philip Elmer-Dewitt, are calling into question Kass’s statements, noting the sequence of events that saw him announce a large position in Apple, float the rumor of a stock split, and then announce that he was selling off shares after the stock spiked. Kass has, however, defended his Tweet, saying that the rumors were “all over the Street”.
While a stock split would not add any intrinsic value to Apple’s market value, some have viewed a potential split as a positive for Apple under the perception that a company is more likely to split when it is confident that the stock price will rise in the future. Observers have also argued that high stock prices for companies like Apple and Google have kept them from being added to the Dow Jones Industrial Average given the outsized impact they would have on the price-weighted index.
Apple’s last stock split came in February 2005, a 2-for-1 move that brought the price of a single share down to just under $45. Apple has refrained from splitting its stock since that time, with investors seeing the share price rise to over $700 before pulling back to the current level around $450. Many investors only invest in units of 100. Apple’s high price locks many investors out. If Apple’s stock price is halved, we can see many small investors jumping in. Many less sophisticated investors who do not look at the P/E or PEG but only look at Apple’s price will stop thinking it is overvalued. Volatility should go up, as small investors are more likely to buy and sell over purchasing and holding for years.
In the past 10 years, Apple Inc. has grown incredibly fast. Moreover, in 10 years Apple’s stock price increased by more than 8,000 percent, as an infographic from Statista shows, and today the Cupertino Company is the most valuable in history.
Apple’s stock market valuation reached last week $621.64 billion, braking down Microsoft’s record from 1991. Yet, there are some controversies about whether Microsoft still owns the record or not, but Apple is surely today’s most adored and most influential company.
The infographic from Statista, named ‘Apple – The most valuable company in the world’ illustrates in a detailed way the market capitalization of giant public and media companies as Exxon Mobil, Microsoft, Wall-Mart, Google, Facebook, HP, Yahoo, eBay, Amazon and many others, compared to Apple’s market capitalization.
Apple is now the most valuable and most influential company that the economy has ever known. On this Monday stock market valuation Apple scored $623.52 billion, setting a new record valuation and taking over the title from Microsoft.
It is not the first time when Apple takes the lead over the market. The Cupertino Company surpassed Exxon Mobil’s earnings in 2011 and Microsoft’s in 2010, but this Monday Apple has managed to score a new, historical valuation number that makes it worthy of rivaling with powerful U.S. giants as General Motors Co., and International Business Machines Corp.
Richard Sylla, professor of financial history at New York University’s Stern School of Business affirms that Apple “is one of those iconic companies. When I think about these companies, their products were used by all kinds of people and their leaders were considered geniuses.”
Apple is the company that became a standard and a source of inspiration for other tech companies and deserves all the approbation. Also, I can anticipate that Apple will break its own new record once with the release of the iPhone 5 in September.
In the summer of 2011 Apple managed to break both its own limits and Exxon’s according to an elder article from AppleInsider:
“Apple’s market cap valuation, which ended the day at $337.2 billion, edged into the lead despite the stock falling down 2.8 percent today. Exxon was valued at $330.8 billion after its shares closed down 4.4 percent for the day.”
This situation was kept almost unchanged until last Thursday when Apple’s market capitalization reached $456 billion, beating both Google and Microsoft market values altogether.
“As of Thursday morning, Microsoft’s market cap was around $256.7 billion, while Google was valued at around $198.9 billion.”
And the circumstances are getting better. This Monday the stock closed at $502.60 and Apple turned into the world’s most wealthy company, followed by the Cupertino, Calif., who capitalized at $456 billion and by Exxon’s $400 billion.
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Since the holiday gifting season the iPhone 4S, iPad2 and other hard drive selling went surprisingly well. Not even competition’s selling, such as Samsung smartphones and tablets and Amazon’s Kindle, influenced Apple’s success. Apple booked outstanding earnings which led to great profit at the end of its quarters, thus, the Monday trading results should not be a surprise.