What happened

Shares of tech titan Apple (AAPL -0.66%) rocketed up 21.4% in August, according to data provided by S&P Global Market Intelligence. That continued 2020's outperformance trend for the device maker. For the first eight months of the year, Apple's share price was up 75.8%.

If you haven't been keeping tabs on Apple's stock, the current share price of about $120 may seem a lot lower than you expect. That's due to a four-for-one stock split that occurred after market close on Friday, August 28. August 31 was the first trading day at the new post-split share price.

A man traces an upwardly curving line of light with his finger.

Image source: Getty Images.

So what

Apple's August outperformance really got its start in late July.

On July 30, Apple reported its third-quarter (April-June) 2020 earnings, and investors found a lot to like. Among other positive news, the company is showing particular strength in the hot emerging trend of wearables. But perhaps the biggest news as far as the market was concerned was the announcement of the four-to-one stock split.

Apple's shares immediately jumped, despite the fact that a stock split has no impact on the overall value of investors' holdings: It only serves to lower the per-share stock price. But the market realized that a stock split was likely to encourage buying among smaller investors. Although many brokers allow purchases of fractional shares, some still don't, and their investors may not have been able to afford Apple's roughly $400 share price. Also, some investors are simply turned off by stocks with high share prices.

As Apple's share price rose, it attracted more interest in the stock, which caused more investors to buy in. News that Apple could be taking the first steps toward launching a streaming bundle certainly didn't hurt, and neither did unsubstantiated reports of the impending reopening of some Apple stores. Even Apple's public spat with Fortnite developer Epic Games couldn't throw cold water on the market's excitement about the impending split.

Sure enough, on the first post-split trading day, investors bid shares up to an all-time (split-adjusted) high.

Now what

Unfortunately, that split seems to have broken Apple's hot streak. On September 2, the company's shares started tumbling and are now more than 10% off their post-split high. This is probably due to short-term investors taking their profits after Apple's incredible pre-split run-up. 

Apple's current valuation of more than 30 times earnings -- its highest in more than ten years -- does seem astronomically high, so choosing this moment to take some profits or reduce your holdings isn't necessarily a bad move. However, Apple seems to have plenty of gas left in the tank, especially with its presence in the hot wearables, streaming, and 5G device markets, so long-term investors will probably be just as comfortable sticking around.