Wear

Apple has its best 2nd quarter ever and announces it's chopping its stock in 4

Friday, July 31, 2020 by Snacks

What 3 months can buy you... A Lyft — the company, not the ride. Apple took home over $11B in profit last quarter, enough to buy Lyft and still have $2B left over for lunch. Despite having its stores closed and its operations slowed during the pandemic, the trillion-dollar fruit managed to post its best fiscal 3rd quarter (2nd calendar quarter) ever:

  • +11%: Total sales jumped to $60B, the most Apple has ever made from April through June.
  • $13B: Services sales (like the App Store, Apple Pay, and Apple Music) were up 15%.
  • $6.4B: Sales of Wearables like AirPods and Apple Watches were up 17%.

Now slice up the Apple... Apple also announced it's going to do a 4-for-1 stock split at the end of August. Investors who own 1 Apple share will suddenly find themselves with 4 (example: if you own 1 share trading at $400, you'd soon have 4 $100 shares).

  • Companies split their stock to lower its price so that more people can afford to invest — but the company's overall value doesn't change.
  • This is Apple's 5th stock split to date. Its last one was in 2014, when it did a 7-to-1 split. It did 2-1 splits in 2005, 2000, and 1987. Apple splits so much, it should be called Banana.
  • Apple's stock price would be way higher if those splits had never happened. Splits are less relevant today though now that fractional shares are more widely available to invest in.
THE TAKEAWAY

The bigger the profit puppy, the slower it grows... iPhone is a fully grown St. Bernard. It's undoubtedly Apple's main profit puppy, making up almost half of its sales. But iPhone sales grew less than 2%, even with the introduction of the cheaper $399 SE. Meanwhile, Pomeranian pups grew in the double-digits: iPad sales were up 31% and Mac sales jumped 21%. The WFH shift was like gourmet dog food for those smaller profit puppies' growth spurts.

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