Apple shocked some investors after Wall Street closed on Wednesday, announcing a 7-for-1 stock split, the Silicon Valley giant’s first split in nine years.
As you might imagine, the news was met favorably, sending Apple’s stock price up more than $40 (7.7 percent) in after-hours trading (as of 5:52 p.m. ET).
The news was surprising because CEO Tim Cook has previously scoffed at the suggestion of a stock split, saying he doesn’t believe it helps investors. His predecessor, Steve Jobs, reportedly believed the same. Also unusual was where the news appeared — in one line buried at the bottom of a press release.
It all means that Apple’s stock price will be slashed to one-seventh of what it is today (approximately $525, dropping to roughly $75), making it more affordable for the average investor. Existing shareholders will own seven times as much stock as they did previously. What that means for the long-term future is unknown; while it might seem likely that Apple’s stock will grow significantly, that’s not always the case in these scenarios.
The financial news overshadowed some pretty stellar iPhone sales numbers released in Apple’s quarterly earnings report (for Apple’s 2014 fiscal second quarter.) The company sold 43.7 million iPhones around the globe last quarter, up from 34.7 million in Q1 2013. That’s growth of 17 percent. Sales in developing markets such as China were a big driver in the increase.
The news wasn’t as great for iPads. Apple sold 16.35 million of them last quarter, down from almost 19.5 million in the first quarter of 2013. But it wasn’t enough for Cook to be pessimistic on Wednesday.
“iPad has been the fastest growing product in Apple’s history,” Cook said on the earnings call. “It’s important to put that into perspective (with 200 million sold, growth is still better than the iPhone and the iPad in three years’ time). “We’ve come a long way very quickly.”
Apple’s revenue was $45.6 billion, up from $43.6 billion in the year-ago quarter. Profit rose from $9.5 billion to $10.2 billion.
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