Apple has been on an absolute tear lately. All the bearishness which preceded the newest iPhone launch set the company up for a great run. The stock is up a mind boggling 65% this year. To put that $450 bn of value appreciation in perspective, it is equivalent to adding the market caps of SalesForce, IBM, and SAP on top of what Apple already was at the end of 2018. So where does it go from here? The thing is, Apple usually continues a big upswing after an iPhone launch, so history is on its side right now.
FINSUM: iPhone sales may continue to surprise to the upside but the medium- to long-term question is whether investors will buy into Apple’s pivot into credit cards, gaming, and streaming.
A few weeks ago we were feeling very bearish about the new iPhone and suggested that we thought Apple’s stock might fall. However, we must now admit that we have had a change of heart. The incredibly poor sentiment that preceded the new iPhone’s release has been replaced with cautious optimism. Reviews of the newest suite of phones have been more positive than expected and this replacement cycle seems likely to be significantly better than previously expected. That, combined with the fact that Apple is not staggering release dates of the models this year, means that the stock could see some significant gains.
FINSUM: Everything seemed very gloomy prior to the new iPhone’s release, but that was the perfect environment for an upside surprise.
Just before the launch of the new suite of iPhones and other Apple products last week, things were looking bleak for the company. There was remarkably little pre-launch excitement and it seemed like this was going to be a rather boring round of updates for the iPhone. However, initial sales momentum is looking strong and could bode well for the company. There are also some one-off factors that could make Apple’s stock pop. According to Evercore, “We think there is inherent upside to Sept-qtr EPS given AAPL isn’t staggering their launches but announcing all the three products simultaneously … This we think will have a positive impact to revenues and EPS in the sept-qtr, though depending on the reception of these products it may be more of a pulling in of revenues from Dec-qtr”.
FINSUM: The iPhone 11 is a little more differentiated than everyone thought, and it seems to have sparked more interest than expected. This may be a less gloomy replacement cycle than expected.
The headline looks a little bearish, granted, but it honestly may be true. The stars seem to be aligning for some big price losses in Apple’ stock. The company is set to unveil the iPhone 11 today, and it is hard to remember a time when there has been less excitement. For many reasons, including this being Apple’s last 4G phone, this model year looks to be a dud, and customer demand for it looks commensurately weak. Accordingly, the replacement cycle is likely to be poor. However, market expectations don’t seem to reflect all this, which means the stock is set up for big disappointment. Even Wall Street equity research divisions are now significantly lowering price targets for the stock.
FINSUM: The smartphone market is growing increasingly commoditized and dull and it is affecting Apple too. The company has done an admirable job diversifying, but 2020 is looking bleak for Apple.
All of the last year’s fear of anti-trust regulation seem to be coming true. Tech shares dropped yesterday on news that top US regulators had divvied up jurisdiction of tech giants for a forthcoming probe. The Department of Justice and the Federal Trade Commission, the agencies in charge of anti-trust, have decided who will manage what as they prepare to launch an anti-trust probe into Facebook, Amazon, Google, and Apple. It is still unclear exactly what will be investigated, as well as the scope of the probe. After the market closed, the US House of Representatives also announced its own investigation. The tumble in shares sent Google into a bear market.
FINSUM: This has been looming for some time, but now looks like a reality. This could be the start of some very serious volatility and changes for the FANGs.