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Apple Split Doesn't Make Stock Cheap: StockTwits.com

NEW YORK (TheStreet) -- Apple  (AAPL) finally looks cheap. But is it?

The consumer tech giant split its stock into seven at the close of business Friday. After trading just under $650, shares opened today at $91.75. Investors responded by snapping up shares at the post split price. The stock had climbed more than a percent by noon.

$AAPL Bought more. Looks like retail is piling in after the split... ? Pax (@drpax) Jun. 9 at 01:07 PM

But is Apple a buy at current levels? If the company's value is climbing solely because of the ability of retail investors to buy more shares than the rise could prove short-lived, say investors on StockTwits.com. However, if enthusiasm for recently unveiled software and rumored products are driving the share price higher, then the gains are likely sustainable and could grow.

$AAPL absolutely true 7:1 has psychological effect. I would be selling a $12 move, but I'm not this one. Other factors also of course. ? Kevin Bradshaw (@kjbusa) Jun. 9 at 01:05 PM

Betting on the psychological quirks of retail investors is not a long-term strategy, say many investors. After all, it's not as though Apple will sell more devices because mom and pop investors feel better about owning say, a hundred shares worth $9,327, than fourteen shares worth the same amount.

No position. I will LMAO if reports show the likes of Ichan and other larger $AAPL stake holders having sold/trimmed over this 2 week span ? Rich (@WolverineTrader) Jun. 9 at 01:13 PM

Of course, Apple could enjoy a bit of a boost from inclusion in the Dow. The lower share price has made the company a candidate for joining the index, according to Bloomberg and many investors.

$AAPL this morning Bloomberg is discussing aapl joining the Dow.. If ths hppns we cld expect a nice increase ? Monaco (@GCerva) Jun. 9 at 06:14 AM

$AAPL just FYI, my guess it joins the DOW in before august.. Nice catalyst.. Good article claimg the same and the whole reason fr the split ? Monaco (@GCerva) Jun. 8 at 07:37 PM

But it's not clear that the Dow factor warrants a sustained jump in Apple's share price either. Sure, there's prestige that comes with Dow inclusion. But arguably Apple's stock has enough cache already. Also, though some investors believe that Apple would get a boost from firms or individuals that concentrate on index stocks, firms that only want to buy established companies may have Apple on their safe list.

However, if interest in the rumored iWatch and recently unveiled operating systems are pushing Apple's shares higher, than the stock could benefit from sustained positive momentum. After all, the product launches aren't anticipated until the later this summer or early fall. And the company isn't known for letting folks down with bad marketing and poor product releases.

Already, research firms are predicting outsize sales for the yet-to-be-unveiled iWatch. In a February report, ABI Research said more than 485 million wearable computing devices will ship annually by 2018. Many of those will be sports and activity trackers.

expectations are absurdly high for iWatch, yet $AAPL might still meet them ? Dre1012 (@Dre1012) Jun. 9 at 12:10 PM

"@PeteO: $AAPL UBS sees Apple selling 21M 'iWatch' units priced at $300 in first year http://stks.co/q0PLK"// KA Ching!!!! ? MrX (@MrX) Jun. 9 at 11:21 AM

On StockTwits, investors were betting that coming products -- not the split-- fueled Apple stock gains. They cited prominent traders on CNBC who were bullish on Apple's new products.

$AAPL Josh Brown also saying it's a buy but not for split - because of upcoming products - add Terranova, Najarian to list as well ? Phoebe Bear (@phoebear611) Jun. 9 at 12:24 PM

Analysts are also betting that Apple's coming products will fuel shares and electronics sales. Stifel Nicolaus analyst Aaron Rakers raised his price target from $93-per-share to $110, according to the Analyst Ratings Network. Rakers cited the iPhone6 and China Mobile as a reason for the more bullish price.

All that said, financial actions aren't meaningless. And though the split may not make Apple intrinsically worth more, management's decision to buy back stock earlier in the year is a sign that management believes it will create more value for shareholders in the near future. 

$AAPL didn't decide to split or buy back at the bottom. either stupid or extremely confident with upcoming products. my hunch is the latter. ? Muzammil Soorma (@muzammilsoorma) Jun. 9 at 12:05 PM

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

 

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