Well there is a lot of talk of an Apple split coming on July 25th, 2007. I tend to think we will not see a split. Historically looking back at the Apple splits, one can see the split trend in line with what I call "market hype". What I mean here is that Apple tended to follow the other tech stocks when they took off (see this link for a full split review http://finance.google.com/finance?q=aapl).
Times have changed for Apple. Now Apple is the leader in the market for "cool gadgets" and slowly attracting the commercial IT market. Lot's of major corporations are accepting Apple technology as their IT platform. Who would have ever thought this could happen? Also, we can't forget how Apple has attracted the younger minds of the world and now these younger minds are making decisions on what technology is best for themselves, their family and the companies that they work for. Think Starbucks Coffee here.
Have you been in a Starbucks on the weekend yet? The average age of the clients is maybe 12 or 13 years old. Lifelong customers now for Starbucks.....Go into a Apple store sometime. The age of the Apple clients will shock you too....
Can you compare Apple to coffee or caffeine? Yep. iPod, iPhone, new Mac's, iTV and who knows what else Apple has in the R&D lab this month..... and iPen maybe? How cool would that be? A pen that can write, take pictures, allow you to listen to music.... Apple is addicting and socially cool. Do you know anyone who does not have an iPod? Next year I will ask you do you know anyone who does not have an iPhone.
Anyway, I really think Apple now controls the "cool gadget" space and will continue to dominate and shock the market for years to come with new technology and products. Why do they need to split? Money managers have plenty of cash on hand to buy this stock at $220 or more. Uh oh! I just let out my price target for Apple by the end of the year......
Money managers don't bet on a split. Bet long... I really feel sorry for the shorts this past couple of weeks on Apple. God those 140 calls must have hurt lot's of good people. Stay long on Apple!
By the way I am still waiting on those job offers from the big brokerage firms. Heck you all read my stuff weekly... Off to the park today! Have a great day.
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3 comments:
Splits do nothing, mean nothing. Pointless post.
Gee I love Anonymous post...So to educate you, splits do matter. As my good friends at Wikipedia state "Stock split refers to a corporate action that increases the number of shares in a public company. The price of the shares are adjusted such that the before and after market capitalization of the company remains the same and dilution does not occur. Options and warrants are included.
Take, for example, a company with 100 shares of stock priced at $50 per share. The market capitalization is 100 × $50, or $5000. The company splits its stock 2-for-1. There are now 200 shares of stock and each shareholder holds twice as many shares. The price of each share is adjusted to $25. The market capitalization is 200 × $25 = $5000, the same as before the split.
Ratios of 2-for-1, 3-for-1, and 3-for-2 splits are the most common, but any ratio is possible. Splits of 4-for-3, 5-for-2, and 5-for-4 are used, though less frequently. Investors will sometimes receive cash payments in lieu of fractional shares.
It is often claimed that stock splits, in and of themselves, lead to higher stock prices; research, however, does not bear this out. What is true is that stock splits are usually initiated after a large run up in share price. Momentum investing would suggest that such a trend would continue regardless of the stock split. In any case, stock splits do increase the liquidity of a stock; there are more buyers and sellers for 10 shares at $10 than 1 share at $100.
Other effects could be psychological. If many investors believe that a stock split will result in an increased share price and purchase the stock the share price will tend to increase. Others contend that the management of a company, by initiating a stock split, is implicitly conveying its confidence in the future prospects of the company.
In a market where there is a high minimum number of shares, or a penalty for trading in so-called odd lots (a non multiple of some arbitrary number of shares), a reduced share price may attract more attention from small investors. Small investors such as these, however, will have negligible impact on the overall price".
Not to beat a dead horse here, but if you have to copy and paste something from Wikipedia to make a point, you don't really know what you are talking about.
By me saying that splits mean nothing, I didn't think I had to state the obvious and explain what a split was. I was just trying to convey that splits have no bearing on the performance of the equity. Equities trade on a valuation basis(i.e. # shares x price), so a split does nothing to the company's valuation. The main reason companies perform splits is to allow the marginal retail investor an opportunity to invest in the company. These retail investors are nowhere near large enough to move the stock.
Hoping and wishing for a split is just foolish. It is like saying you want 1000 shares at $2 instead of 20 shares at $200 because 1000>20, but if you do I would gladly take you up on it.
Now that is out of the way, I'm not trying to bash AAPL, especially since I have a large stake in it. Excellent activity after the earnings in the afterhours market! Woohoo!
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