According to the latest regulatory document submitted by Apple, CEO Tim Cook sold 196400 shares this week, cashing out over $33 million (approximately RMB 240 million).
Although Cook's reduction in holdings is planned, Apple's recent negative news has been constant, and the company's stock price performance is far inferior to the overall market index.
Cook cashed out 33 million US dollars
The documents show that these stocks were sold on April 1st and April 2nd. On April 1st, Cook sold 99200 shares of Apple stock at an average selling price of $170.03 per share; On April 2nd, Cook sold 97100 shares at an average price of $168.62 per share, and an additional 165 shares at a price of $169.30 per share. A total of 196400 shares were sold in two days, with a total price of approximately 33 million US dollars.
Screenshot of reduction document
After the end of this period, Cook's direct holdings of Apple stocks decreased to 3.2802 million shares. Based on the closing price of Apple on April 4th, Cook holds a market value of approximately $550 million (approximately 3.98 billion yuan) in Apple's stock.
This sale is based on a pre arranged trading plan initiated by Cook on November 28, 2022, known as the 10b5-1 trading plan. This plan allows insiders of the company to sell a certain amount of stocks at designated times, which helps to alleviate allegations of insider trading.
What is the 10b5-1 clause?
Section 10b5-1 is a rule of the United States Securities and Exchange Commission (SEC) that came into effect in October 2000 under the Securities and Exchange Act of 1934, addressing insider trading liability issues related to the use or possession of significant non-public information by traders.
Under Article 10b5-1, directors, major shareholders, executives, and other important internal personnel who may have access to significant non-public information may develop a written plan in advance to plan for the sale and purchase of stocks at a predetermined time. In this way, they can trade according to the plan when they do not have access to significant non-public information, without being accused of insider trading. This plan also applies to the company's stock repurchase.
The 10b5-1 trading plan is a written securities trading plan established in advance based on the above terms. The trading plan specifies in writing the quantity, price, and date of the transaction (or a formula, algorithm, or computer program used to determine the quantity, price, and date of securities to be purchased or sold).
Therefore, the 10b5-1 trading plan is particularly suitable for individuals holding significant non-public information, providing flexibility for major shareholders, senior management, directors, related parties, and other insiders of listed companies (including the issuer itself) to trade company stocks at sensitive time points (such as window periods).
Last October, Cook and other Apple executives sold stocks worth over $100 million (approximately RMB 723 million). Cook himself sold 511000 shares at the time, worth approximately $87.8 million (approximately RMB 635 million), with an after tax income of $41.5 million (approximately RMB 300 million).
Apple's Negative News Continues
Entering 2024, Apple has been hit by multiple negative news, and its stock price has also underperformed the market. In the first quarter of this year, Apple's stock price fell by 10.82%, far behind the performance of the S&P 500 index rising by 10.16%.
Apple's performance in China did not meet expectations. According to the latest quarterly report released in February this year, while Apple's main financial indicators are improving, its performance in the China region is lower than expected. Apple's revenue in Greater China for the quarter was $20.82 billion (approximately RMB 150.6 billion), far below analyst expectations of $23.5 billion (approximately RMB 169.99 billion). Apple stated that it has achieved sales growth in all regions except Greater China, while sales in Greater China have decreased by nearly 13% compared to the same period last year. Subsequently, Apple's main product, the iPhone series, began to be discounted and promoted in China.
Entering March, Apple has been facing numerous lawsuits.
Apple has agreed to pay $490 million (approximately RMB 3.545 billion) to reach a class action lawsuit settlement. The lawsuit accuses Apple of violating federal securities laws in the United States for its CEO Cook making false and misleading statements about the company's performance in the Chinese market. The lawsuit originated from an unexpected announcement by Apple on January 2, 2019. On that day, Apple suddenly announced that it would lower its quarterly revenue forecast by up to $9 billion (approximately RMB 65.04 billion).
Cook once told investors in the analyst conference call on November 1, 2018 that although Apple is facing sales pressure in the weak currency markets such as Brazil, India, Russia and Türkiye, "I will not put the Chinese market in this category. Last quarter, our business in China was very strong". Apple also stated at the time that it would stop providing sales data for iPhones and other products, stating that the number of phones sold within 90 days does not necessarily represent the potential strength of the business, and emphasizing Apple's financial strength in recent years.
However, just a few days after Cook's speech, Apple informed its suppliers to cut production. In January 2019, the company suddenly announced its first reduction in revenue expectations since the launch of the iPhone in 2007, resulting in a 10% drop in the company's stock price the next day and a market value evaporation of $74 billion (approximately RMB 535.301 billion).
Investors believe that Cook's remarks misled them into making incorrect investment decisions. In the end, Apple had to invest heavily to reach a settlement with investors.
Subsequently, Apple faced a heavy blow from the US Department of Justice.
On March 21st, the US Department of Justice and prosecutors from over a dozen states filed an antitrust lawsuit against Apple, accusing the company of monopolizing the mobile phone market through its control over Apple's hardware and software, harming the interests of consumers, developers, and competing companies.
US Department of Justice officials also stated that they do not rule out using measures to split the company to resolve this antitrust lawsuit. Apple stated that complying with regulatory regulations would cost a significant amount of money, may prevent it from launching new products or services, and may harm customer needs.
Although the market expects this lawsuit to last for a very long time, if the US government successfully sues, people will witness the tremendous changes in the iPhone and the entire Apple ecosystem. The days when Apple relied on ecology to make a profit will also come to an end.