Record Stock Drop
Shares in US tech giant Apple are trading almost 1% lower pre-market on Friday. Apple grabbed headlines last month when it became the first company to surpass the $2 trillion mark. To put this in perspective, the $2 trillion valuation makes its stock more valuable than the entirety of the companies listed on the FTSE in the UK.
The US company was catapulted back into the headlines this week, however, for different reasons. Yesterday, there was an 8% drop in its share price. The fall equates to roughly -$179 billion. It marks the largest decline in a US-listed stock on record.
4-for-1 Stock Split Takes Effect
The sell-off comes on the back of Apple’s 4-for-1 stock split took place at the start of the week. The move, which was announced on July 30th, had seen Apple shares rallying by 40% ahead of the split.
Prior to the split, Apple was the largest weighted member of the Dow Jones Industrial Average. It accounted for almost 12% of the 30 members listed. However, in the wake of the split, Apple has dropped from the top spot. The stop spot is now occupied by United Health, Home Depot, Salesforce, and Amgen.
Apple now accounts for around just 3% of the index, having dropped almost 10% in proportional size.
Apple Shares Still Big Winners on The Year
Despite the declines seen this week, Apple is still around 70% higher on the year. It has been one of the best-performing stocks over Q2, along with Tesla.
Apple reported Q2 earnings per share of $0.65, beating estimates of a $0.51 EPS. Revenues were seen higher by 11% over the quarter, rising to $59.7 billion, beating analyst expectations of a 2% decline to $52.6 billion.
Indeed, the rally which took place in response to the earnings release was maintained despite Apple CFO Luca Maestri disclosing that the new iPhones scheduled for release this year would be delayed by “a few weeks”. This is as a result of disruption to the group’s supply chain due to the COVID-19 pandemic.
Speaking on the results, Apple CEO Tim Cook said:
“We’re conscious of the fact that these results stand in stark relief during a time of real economic adversity. We do not have a zero-sum approach to prosperity and especially in times like this we’re focused on growing the pie, making sure our success isn’t just our success.”
Apple Shares Retrace Within Bullish Channel
Apple’s share price has retreated sharply back within the rising channel following a break-out above the structure earlier in the week.
Shares reversed ahead of testing the 140 mark, trading back down to around 117 pre-market on Friday. Despite the sell-off, while price remains within the bullish channel, the near-term outlook remains bullish.
To the downside, any further correction lower will bring the 114.56 support into focus, ahead of the deeper 99.46 level.