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Why Apple Stock Surged to a New All-Time High Today

By Joe Tenebruso – Aug 21, 2020 at 5:04PM

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Investors are looking forward to the tech titan's upcoming stock split -- and a potentially massive 5G iPhone upgrade cycle.

What happened

Shares of Apple (AAPL 1.73%) jumped more than 5% to a new closing high of $497.48 on Friday, furthering the tech stock's post-earnings -- and pre-split -- gains.

So what

Apple's market cap recently topped a staggering $2 trillion, following its blockbuster third-quarter results. The tech giant's revenue rose 11% year over year to $59.7 billion, while its earnings per share leapt 18%, to $2.58. Investors were pleased with the robust growth Apple enjoyed across all of its major business segments, particularly since it came during a global pandemic that devastated large portions of the economy.

A person is pointing to an upwardly sloping line.

Apple's stock hit a record high on Friday. Image source: Getty Images.

Many shareholders also celebrated Apple's stock split announcement. The company will split its shares 4-for-1 later this month to "make the stock more accessible to a broader base of investors." 

Now what

It should be noted that stock splits do not change the fundamental value of a business. In many ways, a 4-for-1 stock split is like exchanging a $1 bill for four quarters. The amount of money is still the same after the exchange; it's just divided up into more portions. Still, many investors do tend to get excited about stock splits, and their subsequent buying can drive up a stock's price temporarily.

More important to the fundamental value of Apple's business is an upcoming 5G-driven iPhone refresh cycle, which analysts believe could drive its stock price even higher in the coming months. For one, Wedbush analyst Daniel Ives sees this as a "once in a decade" opportunity that could drive Apple's stock to as high as $600 per share in the year ahead. 

 

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has a disclosure policy.

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