Apple News May Surprise Some
“How Do You Like Them Apples?” is a phrase that is used after someone receives surprising information or unexpected good news.
There is a tendency for a new investor to view a stock split as a good thing. For example, if a company is splitting 4-for-1, and I have 100 shares, then I will have 400 shares after the split. This feels like I own more, but the reality is that my ownership slice hasn’t changed at all. Apple’s shares are up 6.21% after market today, but I doubt much of that increase is related to thinking that the split is wonderful news. Most of the after-market trading is being done my those who know how to read the news.
What Really Matters
The primary good news in the press release is that the revenue for Q3 was more than rock solid for all of their primary metrics. While I would have liked to see a bigger gain in services, I think that will follow as more consumers and companies grow their use of the Apple line of products.
As a side note, the ratings for AAPL on Seeking Alpha are very instructive. Sometimes a Seeking Alpha author can help you understand the risks associated with an investment, but it looks like too many authors just can’t grasp the powerful product and services mix that Apple offers.
Dividends are nice, but don’t buy AAPL for dividends. The goal is capital gains. But you don’t have a gain until you sell.
Full Disclosure and Covered Calls
I own shares of AAPL, and when the shares split, I will own four times as many. However, that just means I still own the same small slice of AAPL that I owned before the shares split. I suppose for options traders this might be viewed as good news if they only owned 100 shares. Now they will be able to trade four AAPL covered call options instead of just one. If I owned 25 shares I could not trade a covered call, but after the split I could trade one option because I will hold 100 shares.