iPhone eventSource: Apple

What you need to know

  • Apple recently announced a 4-for-1 stock split.
  • It announced that AAPL stock would be split on August 24.
  • Traders are betting on big increases in Apple share prices as a result.

A new Bloomberg report says that traders are betting on Apple's share price to rise even higher following its stock split announcement last week.

During its Q3 earnings call for 2020, Apple announced a 4-for-1 stock split for investors, with additional shares being received on August 24. From that report:

As part of its massive Q3 2020 earnings announcement, Apple has announced a 4-for-1 stock split. This split will see current shareholders as of August 24, 2020, receive three additional shares of Apple stock for every one share they already have.

Split-adjusted trading of Apple's stock will begin on August 31.

Apple says that this move is to make the stock more accessible to a larger pool of investors.

As has happened in previous years when Apple has done this, the move is "stirring more bets on the company." From Bloomberg:

Apple Inc.'s planned stock split in the wake of the surge in its shares and strong earnings is stirring more bets on the company, according to TD Ameritrade Holding Corp. Activity in the world's largest technology company "sticks out" over the past week, a repeat of the pattern seen in previous years when Apple split its stock, Christopher Brankin, chief executive officer of brokerage TD Ameritrade Asia Pte in Singapore, said in an interview Tuesday.

As Bloomberg notes, AAPL has risen for five straight days since its earnings call, adding 17% to its value. According to one derivatives strategist, Apple options "are pricing in more upside risk versus downside than at any time this year", even though Apple's stock price has more than doubled since March.

All of this means that despite a Q3 earnings call that surpassed even the most bullish analyst estimations by some $4 billion, it seems the only way is up for AAPL. Not everyone is sold, however, as Bank of America downgraded its AAPL share rating from 'buy' to 'neutral', citing a number of risks including higher tax and slower growth of services.