Apple Inc. (AAPL) stock is rapidly approaching the two key dates for its seven to one stock split. The new split-adjusted shares start trading June 9, but there’s still time for investors to make changes ahead of the record date.
Icahn adds to Apple stock, others trim or exit
Seeking Alpha contributor Joel Elconin notes that some big investors made changes to their Apple Inc. (NASDAQ:AAPL) holdings lately. Carl Icahn has remained as bullish as ever on Apple stock. He added more shares to his portfolio in March before the company announced its stock split. That well-timed trade meant that he bought shares between $522.81 and $549 per share during the month.
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Meanwhile George Soros slashed his stake in Apple Inc. (NASDAQ:AAPL) from 291,000 to 81,000 shares recently. Dan Loeb dumped all 100,000 shares of Apple stock he had been holding. Elconin suggests Soros might be using the recent increase in Apple shares to get rid of the rest of his shares in the company.
Apple stock stalling?
The author suggested that Apple Inc. (NASDAQ:AAPL) stock seems to be stalling in the wake of the positive surprise in the company’s earnings report. The company’s shares peaked at around $604 on May 6. They dipped down below $590, but today Apple stock rallied and passed the $604 mark again to close at $604.59 a share.
Elconin believes long-term Apple Inc. (NASDAQ:AAPL) investors who bought in at around $385 a share in April 2013 could be dumping some of their stock ahead of the split. He also believes they could be selling based on the $600 a share level, which is of psychological importance.
Pushing Apple stock over $600
So what’s it going to take to keep Apple Inc. (NASDAQ:AAPL) stock above $600 a share and push it even higher. Of course the company is going to have to beat earnings expectations again, just as it did in the report for its March quarter. Also the company increased its share repurchase program and raised its quarterly dividend 8%. The author notes that it will be difficult for Apple to repeat all three of these bits of good news again for some time. He also believes it will be hard for Apple to eke out another big earnings beat in its next report if it doesn’t launch a new product.
He notes that some Wall Street analysts have price targets in the $600s and that many didn’t increase their price targets for Apple Inc. (NASDAQ:AAPL) stock after the company’s magnificent earnings beat. Citigroup and Credit Suisse both maintained their ratings of Hold and Neutral, respectively. Each of them only added $10 to their price target, with Citigroup bumping its target up to $570 and Credit Suisse raising its target to $560 per share.
Apple’s split compared to MasterCard’s split
He then goes on to look at what happened when Mastercard Inc (NYSE:MA) split its stock on Dec. 10. The situation was very similar to Apple Inc. (NASDAQ:AAPL)’s situation, at least in terms of how the company announced the split. MasterCard announced a ten for one split, revealed its $3.5 billion share repurchase program and boosted its quarterly dividend. Right after that, the company’s stock pushed higher heading into the Jan. 9 record date.
Elconin notes that investors who “chased the issue into the split” bought almost at Mastercard Inc (NYSE:MA)’s peak. The company’s stock hit $84.42 per share on the record date and then spiked to a new high of $84.75 the next day. Since then though, MasterCard shares have been declining steadily. He says investors should consider whether Apple Inc. (NASDAQ:AAPL) might follow the same sort of pattern.