Why Apple’s stock rose 5% this morning

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What happened

Shares of tech giant and iPhone maker Apple (NASDAQ: AAPL) are up 15.5% over the past week, hitting an all-time high after reporting strong third quarter earnings and a surprise 4-to-1 stock split. These shares even continue to rise today Today – over 5% early in the session and sticking to a gain of around 3.1% at 12:25 p.m. EDT.

Which is quite surprising, given the news.

Image source: Getty Images.

So what

This morning, The Wall Street Journal reported that a little-known Chinese tech company – Shanghai Zhizhen Network Technology – is suing Apple for $ 1.4 billion in a Chinese court, alleging that Apple’s virtual assistant, Siri, infringes patents held by Zhizhen.

Shanghai Zhizhen obtained a favorable ruling on its patent from the Supreme Court of China in June, according to the Journal. Now he appears to be capitalizing on that victory to try to extract $ 1.4 billion in patent licensing fees from Apple. If the tech giant doesn’t agree to its terms, Shanghai Zhizhen could potentially ask China to ban the production and sale of Apple devices using Siri in China – Apple’s largest overseas market and the source of most of the iPhones he builds for sale elsewhere.

Now what

It would appear to pose a significant threat to Apple’s business – so why is the stock rising today despite the news?

According to JournalThe Shanghai Zhizhen lawsuit “is not a sure victory” and the injunctions against production and sale “are rarely granted by Chinese courts” – so the threat posed by Shanghai Zhizhen may be overstated. Potentially, Apple could end up putting the dispute to bed with licensing fees well below $ 1.4 billion.

In the meantime, investors seem happy to dismiss the threat in light of the prospect of their Apple shares quadruple in number (if not in value) later this month. The Apple split is expected to take effect on August 24.



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