The stock of Apple Inc. (NASDAQ:AAPL) has witnessed an upward surge in recent days, following favorable Q2 2014 earnings and a generally upbeat summary of the Cupertino company’s prospects from Tim Cook. The prospect of an upcoming 7 for 1 stock split in a few weeks’ time has also triggered a bullish interest in the stock on the part of investors. Many, including activist investor Carl Icahn, seem to be acquiring stock in anticipation of the split and seeing their portfolio multiply sevenfold.
At the moment, Apple has managed to break through the $600 barrier but has not advanced beyond it. This alone is major news, since the tech company’s stock remained stubbornly underperforming for the past several years, according to most analysts. The current stall, however, raises questions as to whether the California enterprise can keep up its momentum.
According to the Wall Street Journal, Ari Wald of Oppenheimer has predicted two more points that Apple (AAPL) can hope to ascend to if it plays its cards right. The next hurdle is $650, and after that, $700. With around two weeks remaining until the stock split, this means that a narrow window exists if Apple’s shares are to reach that point in the foreseeable future. Once the split occurs, prices will be cut sharply, so that a single $700 share will become a cluster of seven $100 shares, for example.
The same question will apply after the split, of course, if Apple share prices have not already climbed to the lofty height of $700 or collapsed back to their more typical $525 to $550 range. Today’s price of $600 will be equivalent to approximately $85 after the split, and the Holy Grail of $700 will become $100 instead. The midpoint of $650 will become roughly $93 per share.
The split itself could cause stock prices to spike upward in the days succeeding it. The next question to exercise investors will then be whether a short position is most beneficial, as the share prices seek equilibrium at a lower point, or whether the outlook will remain bullish, rewarding an emphasis on long positions.
Ultimately, the success of Apple (AAPL) in capitalizing on its success probably depends largely on its ability to roll out some highly attractive product within the next few months. The second quarter earnings report laid the foundation for additional triumphs, but no more. Now the Cupertino electronics firm needs to grasp its opportunity with both hands before the moment slips past and its stock drops back to lower prices.
