Apple to overtake the value of the entire FTSE 100
The tech giant Apple Inc (APPL:Nasdaq) is now valued at over $2trn USD – while collectively the UK’s 100 largest listed companies are worth around $2.21trn USD.
Apple has seen its shares surge since the Covid-19 outbreak, and saw investors invest into US tech stocks delivering services and entertainment in lockdown. On the horizon, the company is expected to benefit from the rollout of 5G iPhones in emerging markets, and its move towards offering services, such as Apple Music and iCloud, as well as manufacturing products.
Neil Wilson, an analyst at Markets.com said: “Apple has done well because it’s created a brand with immense power and I think investors have really bought into the pivot towards Services to generate more sustainable revenues than being a pure play hardware manufacturer, which has taken place under Tim Cook. The upcoming rollout of 5G iPhones is also very much in the equation. “It has a rock solid balance sheet and is in the FAANGs that have benefitted most from the pandemic due to the work from home trend. I also think we could throw in the upcoming stock split as a factor as despite the fact it ought not to matter to the share price, it will undoubtedly make it easier for retail investors – a growing crop of US day traders – to buy the shares. I’d park the money in both, but the FTSE offers a greater income at current levels – even after a massive cut in dividends.”
The FTSE is dominated by well-established behemoths with pharmaceutical firms AstraZeneca and GlaxoSmithKline, lender HSBC, drinks giant Diageo and tobacco firm BAT make up a fifth of its value.
Apple offers share split
Apple Inc (APPL:Nasdaq) has made it easier for more investors to get in on the action, with a stock-split, following its huge valuation milestone, which shows no signs of slowing. Its highly anticipated 5G iPhone and opportunities in emerging markets are likely just around the corner to further bolster performance
Apple’s stock split process began at the end of August. Current investors received their additional shares after the closing bell on August 28, and the shares began trading at the new, split-adjusted price from August 31.
The four-for-one stock split will not change the value of any investor’s total holding of Apple, it will just grow the number of shares making up portfolios. So, if a potential investor has a set amount of money they want to invest in the company, it wouldn’t necessarily matter if they bought before or after the split.
Here is an example: Assuming share prices don’t move dramatically during the several-day split process, if an investor owns two Apple shares at $500 USD each before the split (a $1,000 total holding), after the split they will own eight Apple shares at $125 USD each (still a $1,000 total holding).
The split is expected to make a difference for smaller, individual investors who may not be able to afford shares in Apple at $500 USD each (currently it’s cheaper to buy an iPhone SE than a share of Apple) but could afford the lower, post-split price.
As of Monday afternoon, Apple shares were trading around $505 USD
This is Apple’s fifth stock split since going public with previous splits being a hit with investors.
In June 2014, following a seven-for-one stock split, Apple shares were trading at $94 USD. Within a year, share prices had grown nearly 37% to $129 USD.