Thursday, January 31, 2013

Apple Inc. (AAPL): Good Buy or Goodbye?

Apple Inc. (AAPL) is once again feeling the strain of investor tension. Trading volume has fallen off considerably, and StreetInsider calls it “anemic”.

Apple trades approximately 22.1 million shares on an average day at the exchange, but yesterday volume fell by 27% and the company traded only 14,887,300 shares. At noon Apple’s volume was showing only 4,750,000 shares, which means that if the pace remains the same, shares will only swap hands somewhere near 12 million times. This is yet another area the company seems to be bleeding.

While some investors may feel that lower volume is a positive sign, as it would seem that people have slacked off in selling their shares of the tech giant, other analysts and investors may feel differently. Lower volume could mean that buyers have failed to step up to the plate and purchase a company they feel could lose value in the coming quarter. The latter could be true, although Apple is trading at a major low compared to its September high.

This could be a good time for Apple management to reconsider the possibility of a stock split. Tim Cook notably called such a move stupid, but it’s possible he should reconsider his view in light of recent trading activity. Apple is in desperate need of new investor money and a stock split would bring an influx of fresh investors with much needed capital. Inc. (CRM) recently took the plunge and has asked for shareholders to approve a 4 for 1 stock split. This will make shares more affordable and attractive to a wider group of investors. This also will increase trading liquidity for common shares and make employee equity awards more attractive, according to Salesforce reports.

Apple Inc. (AAPL) may need to take note of the positive side of a split and consider making shares available to more people. Shares are currently trading at $455.52, which is $1.31 down from its opening price this morning and volume is at 5,607,507 as of 1:05 PM.