close
close

Latest Post

How many fast charging stations are needed in Europe? Man falls more than 20 meters from tree in Kansas City, fire department says
Will there be an Apple stock split in 2024?

Apple (AAPL) is the second-largest company (by market cap) in the world and is one of the Magnificent Seven stocks that accounted for much of the S&P 500’s gains last year. Thanks to a number of exciting launches planned for the fall, Apple investors are optimistic about the company’s near-term future. This optimism has many asking: Will Apple see a stock split in 2024?

Let’s try to answer that question by examining what’s currently happening with Apple stock, the company’s stock split history, what analysts are saying, and how a split might affect AAPL shareholders. I’ll conclude with a prediction about the likelihood of an Apple split this year.

The current status of Apple shares

Apple is trading at about $214 per share, representing growth of more than 15 percent since January.

However, year-to-date growth has been bumpy. AAPL stock fell between January and late April. The decline reversed in early May when the company released its second-quarter results. Investors reacted positively to higher revenue in services, Apple’s highest-margin business. The company also announced a massive $110 billion share buyback authorization and a dividend increase. In the 24 hours following the results release, Apple stock rose nearly 6%.

AAPL stock received another boost in June when the company unveiled its AI feature set called Apple Intelligence. The share price rose as high as $220 before settling back down to the mid-$210s.

The think tank at Forbes has crunched the numbers, done the research, and done the analysis to identify some of the best places to make money in 2024. Download Forbes’ most popular report: 12 Stocks to Buy Now.

History of Apple’s stock split

Apple has split its stock five times. The dates, ratios, and approximate, unadjusted stock prices before and after the split are shown in the table below.

Management teams conduct splits primarily to manage the company’s stock price. From the information above, we can conclude that the ideal price for Apple has evolved over time. Initially, the management team reset the stock price to around $50. The last two splits resulted in higher prices in the $100 range or close to it.

Market sentiment and analyst forecasts

According to MarketBeat, analysts rate Apple stock as a moderate buy. There are about two dozen buy recommendations and ten hold recommendations, plus one strong buy recommendation and one sell recommendation. The average price target of all analysts is $214.29, which is AAPL’s current price.

Analysts also expect the iPhone maker to close fiscal 2024 with 8.1% revenue growth and earnings per share of $6.59. Last year, earnings per share were $6.13.

As for Apple’s split potential, analysts don’t talk much about it. That’s understandable, given that the stock has grown only modestly since its last split in 2020.

Possible catalysts for an Apple stock split

As the year progresses, Apple could face two potential stock split catalysts. The first is a strong iPhone upgrade cycle driven by demand for smartphones with Apple Intelligence. Second, rising demand for AI-enabled apps could lead to higher service revenues as Apple users upgrade quickly.

Strong iPhone upgrade cycle

A beta version of Apple Intelligence will be included in the late 2024 versions of iOS 18, iPadOS 18, and macOS 15 Sequoia. But only some Apple devices have the processing power to run the AI ​​features. Macs and iPads with M-series processors are in this group, along with the iPhone 15 Pro and 15 Pro Max.

Apple smartphone users who want Apple Intelligence but don’t own a 15 Pro or 15 Pro Max will need to upgrade. The next available option is the iPhone 16, which is expected to launch this fall.

The iPhone 16 will include other upgrades in addition to the AI ​​features, which is common practice at Apple. New models usually have more processing power as well as improvements in the camera, display and design.

Still, Apple Intelligence could be the main driver of demand for the iPhone 16. If the AI ​​features prove to be game-changing for iPhone users, the upgrade cycle will be strong — and potentially drive AAPL’s share price high enough to warrant a split. That kind of growth would make Apple one of the best stocks of the year.

Services benefit from AI-powered apps

The iPhone 16 could also inspire a new generation of third-party apps that leverage the phone’s native AI functionality. Apps that establish themselves as must-have productivity tools will boost Apple’s revenue. The company charges developers an annual membership fee of $99 plus up to 30% commission on in-app purchases and subscriptions.

Service revenues related to the launch of Apple Intelligence will lag behind device sales, so this catalyst has a longer duration.

Stop chasing downsides in the market. Expert analysts at Forbes have identified the 12 superstars that will deliver returns in 2024. Don’t miss out – download “12 Stocks to Buy Now” and secure your front row seat for the coming boom.

Potential impact of a stock split on AAPL shareholders

Stock splits should not have a significant impact on AAPL shareholders other than a change in the share count. Mathematically, a split is a reallocation of the company’s market capitalization among a new number of shares. It’s like taking a pizza cut into quarters and cutting each slice in half to get eighths. The split adds more slices, but the size of the pizza stays the same.

However, investor perception is not taken into account when calculating a stock split, which can have consequences for shareholders. Let’s look at the short-term and long-term effects AAPL shareholders could expect if the company splits its stock.

Short-term considerations

A short-term Apple stock split would change the share count for existing shareholders according to the split ratio. A 2-for-1 split would double the number of shares available and double shareholders’ stock portfolios. A 4-for-1 split would quadruple the total share count.

Shareholders may also see their Apple holdings increase in value when the split is announced and in the days leading up to the split taking effect. This is common because investors often interpret splits as a vote of confidence from the management team.

Thoughts on the long-term prospects of AAPL stock

Longer term, stock splits can broaden the audience for a stock – which should, in theory, improve demand and liquidity. Let’s look at the Tesla stock split of 2020 to illustrate this theory. Before the electric car maker’s 5-for-1 swap, the stock traded for $2,200. At that price, the stock is only an option for investors with a budget of at least $2,200 per trade. Presumably, there are far more investors who could accept Tesla’s post-split price of $440.

Despite the logic of this theory, there is no clear data showing that splits stimulate lasting demand or create value in the absence of other factors. Earnings performance is ultimately the strongest driver of stock appreciation, meaning Apple shareholders should expect the company’s next split to have little impact in the long term.

Will there be an Apple stock split in 2024?

Apple is unlikely to split its stock in 2024. The stock price today is about half of what it was worth in 2020 when the company announced its last split, a 1-for-4 swap.

The company could initiate a 2-for-1 stock split to return to its 2020 post-split price, but that strategy might not sit well with investors. Nvidia’s recent stock split was a 1-for-1 swap at a ratio of 10 following a period of extreme growth for the AI ​​chip designer. By comparison, a 2-for-1 Apple stock split following a period of more modest growth might seem like the leadership team is simply trying to grab headlines.

Bottom line

Investors will have to wait for the sixth stock split in Apple’s history. The big launch of the iPhone 16 this fall, as well as the positive reception from Apple Intelligence, could speed up the timeline – but the company still has a long way to go before a split seems justified.

Continue reading

The think tank at Forbes has crunched the numbers, done the research, and done the analysis to identify some of the best places to make money in 2024. Download Forbes’ most popular report: 12 Stocks to Buy Now.

Leave a Reply

Your email address will not be published. Required fields are marked *