Hello dear readers! Investing in securities largest companies often cited as the best investment, but how does that compare with the fact that Apple's stock fell?
I propose to find out the factors affecting the price of shares of the IT giant, find out the prospects of the corporation and get acquainted with the forecasts of experts - in which direction the price of Yabloko shares will change in the near future. Let's also find out whose paper is worth buying as an alternative to investing in Apple.
- iPhone XS starting at $ 999;
- XS Max with 6.5-inch screen starting at $ 1,099;
- XSMax with increased memory capacity up to 512 gigabytes - from $ 1449.
Smartphone buyers greeted the new gadgets relatively indifferently, experts ruled out the excitement in advance, which was the reason for the falling share price.
The second reason is the fact that a week earlier Apple shares already set a record of $ 229.67, bringing the corporation to the first place in the ranking of the most expensive on the planet with a capitalization of $ 1 trillion.If the trend reaches its peak, then further downward movement occurs ...
On Friday, November 2, shares fell immediately before trading by 5% to the end of the previous day, to $ 211.2: this is how the market took the sincere admission of representatives of the corporation that it stops publishing information about the number of iPhones, iPads and Macs sold.
Although the company proceeded from the interests of investors, for whom it is more important to know how much money the issuer earned, and not how many units of goods he sold.
But the shares fell most of all after the New Year - on January 3, 2019, securities fell during trading by 9.43%, or up to $ 143.03 by the close of the day. Once again, the corporation "let down" honesty - its head Tim Cook warned investors that Apple expects a decrease in revenue in the first quarter due to unpredictable problems with sales in China and other countries with growing markets.
Mr. Cook attributed the fallen sales in the Middle Kingdom to the trade wars between Washington and Beijing. As a result, shares of the American giant's Asian suppliers fell after Apple's shares, and Yabloko itself slipped from first place in the world in terms of capitalization to fourth, losing the pedestal to Microsoft, Amazon and Google.
What's happening with Apple stocks now
Stock price on the stock exchange: online chart
In early June, Apple fell again due to media reports about the upcoming audit of the corporation for compliance with US antitrust laws.
Even the presentation of iOS 13, which took place on June 3, was overshadowed by the news of a possible visit to Apple by inspectors from the US Department of Justice. According to Reuters, such plans of the department are connected with repeated accusations of the giants of Silicon Valley of discriminatory actions against the Republicans in favor of the Democrats, sounded from the lips of Donald Trump himself.
It is expected that for the same reason, the Ministry of Justice will also "shake" Facebook and Google, whose securities fell simultaneously with Apple's.
However, after the aforementioned fall in early January, Apple shares went up again and until June were steadily increasing in price, and on June 5 they returned to the "green zone".
Course dynamics for all time
Apple shares, listed on the NASDAQ stock exchange under the AAPL designation, are characterized by stable growth and significant declines, alternating with long-term trends. At the same time, the volatility of the shares of the giant, which changed the world with iPhones and iPads, does not exceed the indicators of other issuers on the US stock market.
Decreases in AAPL tend to be short-term. Quotations fell seriously only in 2008, but this is due to the global financial crisis. The dynamics of Apple itself has consistently remained positive.
From 2006 to 2017, the shares increased in value 15 times. A 15-fold increase in the price of this asset plus dividends - this is how much private investors earned during this period, who bought the company's securities and did not dump them later.
What affects the share price
The value of the IT market giant's securities is determined by:
- The demand for gadgets, computers and other Apple products.
- A behavioral factor - above I described how painfully Apple investors react to negative news about the corporation.
- Indicators financial statements: revenue, gross profit, p / e, p / b ratio.
It is noteworthy that on November 2, 2018, dissatisfaction with the concealment of the number of gadgets sold for some reason prevailed over the report published the day before, according to which the corporation increased both income and net profit.
Company perspectives
Analysts are inclined to believe that the development of the new iPadOS operating system, presented simultaneously with iOS 13, will become a serious growth driver for Apple, allowing it to significantly increase the power of new iPads, and with it, sales of tablets.
But even with the most disappointing state of affairs with the sale of gadgets, Apple is not threatened with bankruptcy, since the company's activities are not limited to them. She actively develops:
- Own online TV service, providing access to the most in-demand content exclusively through a paid subscription.
- Service mobile banking Apple Card with the issue of payment and credit cards.
- Apple Arcade is a new catalog of games, including exclusive ones.
- Apple News + is a subscription service for the world's most popular magazines for online reading.
- A number of innovative areas (artificial intelligence, ANN, augmented reality technologies and autopilot).
In addition, the company has a colossal margin of safety, allowing it to overcome any difficulties and continue to grow in the future.
Analytics and forecast for paper
Experts predict that Apple will retain its leading position in the IT-device market, which guarantees its unrelenting popularity among investors. The positive dynamics in the next few years will remain the same. Investors are being asked to put aside worries about whether Apple shares will fall again.
In favor of AAPL is the report on the income of the corporation for the last 12 months (growth in percentage):
- gross profit - 38.5;
- operating margin - 25.34;
- profitability ratio - 21.69;
- return on investment - 21.3.
The volume of finance received from operating activities for the half-year from October 1, 2018 to March 30, 2019 amounted to $ 37 billion 845 million, net change Money- plus 13 billion 904 million dollars.
Apple's main competitors in the market for physical IT products are Samsung, Sony Mobile, manufacturer of wrist gadgets Fitbit, laptops - Dell, headphones - Bose, developers software products Microsoft, Facebook and Google.
Their shares should be bought either instead of AAPL, or simultaneously with them, diversifying the portfolio and saving yourself from losses due to falling quotes.
Conclusion
The company's earnings provide compelling evidence that Apple is doing well. Misunderstandings with Trump and lower-ranking politicians are solvable, the falling stock prices due to behavioral factors is a short-term phenomenon.
It follows that the purchase of AAPL - good investment money, even if stocks have dropped repeatedly throughout the year. Sly investors surely managed to earn decent money on this rally.
It is rather difficult to describe in words a situation when you were sure of 100% take-off, and the market put everything upside down first, and then all with cancer. Well, except for those who had insider information ...
In the stock market, I hate 2 types of people: vang-provocateurs (“the hamsters will have their hair cut! The end is near!”) And whiners-contemplators (“well, I thought it would be like this”). In 100% of cases, neither those nor those are the objects of my attention, but yesterday's events caused such a strong activity in their ranks.
Fall of Apple shares after the report on November 1, 2018
And the culprit for all this is a rather unexpected drop in Apple shares. I will not pretend to be an oracle here. I myself am sitting in paper and the subscribers of my channel in the telegram (@freeman_invest) know perfectly well that I even bought in addition to the upper values (220) literally an hour before the report. I pinned quite high hopes on paper, because before that I had been so badly burned out on Facebook. And after all, there was no sign of trouble, but the shares fell by as much as 7% on the postmarket.
Why did Apple stock fall after the report?
I could not understand the logic of the investors who caused the collapse of this security. The fact remains - the report was very good, the company reported record-breaking profitability, but it did not seem to meet the expectations of investors in the long term. The indicators were as follows:
- Profit: $ 2.91 per share vs. $ 2.78 consensus forecast by Refinitiv
- Revenue: $ 62.9 billion vs. $ 61.57 billion - Refinitiv consensus forecast
- IPhone Sales: 46.89M vs. Consensus of 47.5M According to FactSet and StreetAccount
- IPhone Average Selling Price (ASP): $ 793 vs. $ 750.78 expected by FactSet and StreetAccount.
It is possible that the reason for the collapse was the fact that the company decided to no longer report on units of phones, Macs and iPads sold. All indicators will be grouped into a single indicator of the company's profit. This is done in order to emphasize the fact that in addition to phones, tablets and computers, the company has a huge number of technologies that it is ready to sell, which are not so easy to count in simple numbers that Apple investors love so much.
My opinion on investing in Apple
In my opinion, this is one of the most stable securities on the market as a whole. When all the sausages (remember and), Apple remains a fairly calm haven. Yes, it is hard to get 12% per month in it, but not everyone needs it, and not everyone is ready to take such risks.
Even Warren Buffett, who has a rather conservative approach to investing, has invested in it.
"This is an incredible company," Buffett told CNBC.
By the end of June, $ 46.6 billion of Buffett's money lay in Apple. And it is unlikely that something will change in the direction of decreasing the share. Rather, it will increase.
Apple shares were on the rise for most of 2018. Cases of really sharp downturns can be called isolated, and their duration was no more than 3 weeks, after which the shares returned to their positions and continued to grow.
Let's look at all the cases of falling Apple stocks in 2018
The first drawdown was in January 2018. It was connected with the fact that the company publicly announced that it was postponing significant changes in IOS for a year. The fall was about 10%, everything grew back in about 2 weeks.
03/16/18 there was another fall when Apple went to the bottom. The reason was that the release of smartphones was suspended for 2 weeks due to a breach of production technologies. The situation was around the use of waterproof components of the device. On the 26th, the situation stabilized, on 17.04 the shares reached their previous position, on 10.05 there was a historic jump at that time.
On June 14, Apple announced a 20% decline in Iphone production, which caused another drop in the company's shares, on July 9, the share price returned to its previous levels, and on July 25, there was another all-time high. Only on July 26, a fairly serious vulnerability in the Bluetooth protocol was found, which also slightly dropped the shares, which on August 1 were already rushing upward.
In the future, there were several more soft falls. Apple peaked at $ 233.47 / share on October 3. After that, there was a correction of the entire Nasdaq exchange, dropping Apple into the corridor of the average price of 215-220.
Then comes the expectation of the report, where the price of the security reached $ 222 per share. And then our unfortunate report comes out ... this moment the price is 205.9 (right when I write this line). And this is certainly sad, but temporary.
What are the prospects for investing in Apple?
My opinion is chic, especially for those who visit current price... I have a feeling that Apple pulled the entire Nasdaq with it, everything fell: AMD, which had barely begun to grow, Tesla at its next quarterly highs, Nvidia, which also began to rise from the grave, and much more. But look at the stock market in general: yes, there may not be the coolest prospects at the moment, but if you are looking for the most stable security that will give not only good income, but also dividends, then I simply cannot offer anything better than Apple.
Now I will support my words with facts. Apple is a sales company that lives by selling high-tech devices and technology. This is not Facebook, which currently receives income mainly from selling ads on itself and on Instagram, which also has a non-monetizing hang in the form of Watsap (Who knows how to monetize a messenger? I know only one option - showing relevant ads, but who then he will use it ??? ...). This is not Tesla, which suffers eternal losses throughout its entire existence (profitable quarters can be counted on the fingers of one hand). Apple is different. And at the moment when all companies that are not very confident on their feet in terms of their profitability will fall, Apple will have a more or less stable position.
In the end, I myself have a whole bunch of Apple gadgets at my personal disposal and I'm not going to give them up. And I’m hardly the only one)))
Investing in Apple is a great idea in the short term right now and long into the foreseeable future.
Many of my readers ask what I invest through. I answer with a link to. The thing is cool, and I recently added a great review to my review on the latest changes.
The IT business started 2019 with embarrassment: on January 2, Apple CEO Tim Cook addressed investors with an open letter, in which he just said that “earnings in the last quarter will be lower than initially expected.”
The phrase was enough to make the company's shares collapse by $ 66 billion at the next session (as a guideline: the value of Gazprom shares is $ 57 billion).
Two days later, Apple's main competitor, the Korean Samsung, issued a similar warning, however, instead of vague phrases, it preferred to publish figures: a decrease in quarterly sales by 11% and a decrease in profits by 29%. The market took the negative positively and reacted with even moderate growth.
American IT-technology experts agreed, however, not with Samsung's arguments, but with Apple, and began to frighten ordinary people with direct quotes from Tim Cook's open letter: in the second half of 2018 in Chinese economy a recession began, the decline in GDP was almost the worst in 25 years, by financial markets Uncertainty reigns in the Middle Kingdom, and sales of smartphones are rapidly declining. Do you know why? Because the US has started a trade war with China.
TO the reasons listed the catastrophic drop in sales of iPhones in China, the head of Apple also added treacherous behavior of buyers from "developed market" countries: instead of buying the latest iPhones, ungrateful fans of apple technology chose to replace batteries in their old smartphones, taking advantage of the noble gesture of Apple, which reduced the cost of this procedure from $ 79 to $ 29.
Since the public does not understand the intricacies of the IT business and relies on the conclusions of professional industry analysts, rumors spread across the planet's tabloids: "Smartphones are a kirdyk." Moreover, it is not clear which one: either only iPhones, or all at once.
Description to image
Tim Cook offered investors his version of Apple's profit cut and received a disproportionate response from the market - $ 66 billion washed out of the company's capitalization during the day of stock trading. Where did this overreaction come from? After all, the Apple CEO clearly counted on something exactly the opposite, since he decided to break the tradition and comment on the results. quarterly report a month before their official announcement.
Public Company Quarterly Report - One of the Key Drivers stock market... For the exchange, however, it is not the report figures themselves that are important, but their correlation with market expectations and analysts' opinions. After all, the exchange quotes of a public company are always like life on loan: the securities in favor of the market are much more expensive than the company is able to earn in a year. Let's say this indicator (ratio market value to annual profit) is 10 for Apple, 17 for Amazon, and 114 for Netflix.
In a situation where stock quotes are several times higher than revenues, company leaders have to be very careful in choosing expressions so as not to frighten investors in vain. For the same reason, public comments that precede official statistics are rarely made and with the sole purpose of sweetening the pill in a situation where too negative results are expected.
Tim Cook certainly knows all this alphabet, so he writes an "open letter" in which, preparing investors for trouble, he tries to speak with them in a language that he thinks they understand.
The stock exchange, being a product of the collective unconscious, is completely unable to analyze the subtleties of economic or social processes. For this reason, Cook talks about what the crowd is hearing: Donald Trump's trade war, which allegedly caused a recession in China, so iPhone sales inevitably fell. Apple CEO apparently judged that the faceless stock exchange crowd was not able to understand right off the bat that the recession, which, according to Cook, began in China just six months ago, could not affect purchasing power, even more so - on the habits of the population, simply because it takes much longer.
The only reactions available to the collective unconscious on the stock exchange are two primitive impulses: fear and greed. Tim Cook is trying to allay fear, so he never mentions the true size of financial losses expected in the last quarter in his "open letter": "Incomes are lower than expected" - that's the whole comment.
Where did the Apple CEO go wrong? In that he underestimated the suspiciousness of the patient. A dubious patient cannot be told: "You, my friend, have wonderful analyzes, you only need to double-check a little, so please do a biopsy." A dubious patient will instantly google, find out about situations when a biopsy is required, and then take out the brain to the doctor. And so it happened: stock people raised Apple's latest report of November 1, 2018, found in it the phrase "projected profit for the next quarter is in the range between $ 89 and 93 billion", compared it with the phrase from the "open letter" - "profit was approximately $ 84 billion ”and performed an elementary arithmetic operation: 93 - 84 = 9. iPhone sales fell by $ 9 billion.
Please note: stock exchange people took from the previous report not the lower profit bar (89), but the upper one (93), and it was this figure - $ 9 billion in losses - that appeared in all publications of the American press after the bloodbath of Apple shares on the stock exchange on January 3 ... That is, they assessed the situation according to the worst scenario. Indeed, fear has big eyes.
What really happened to Apple's sales in China? What kirdyk of iPhones in particular and smartphones in general was the public worried about?
First, the reasons for the decline in sales indicated in Cook's letter are from the evil one. Apple tried to keep a good face on a very bad game. It is enough to look at a small plate to understand the entire inconsistency of conversations about the recession and the American customs wars:
This is the Chinese smartphone market in dynamics from 2017 to 2018. Apple's share is 9%. Twice as many for HUAWEI, vivo and OPPO. One and a half times more from Xiaomi. Samsung is a dwarf in the Chinese market (1%).
Per Last year iPhone sales in China fell 17%, Samsung sales fell a catastrophic 67%. But HUAWEI's sales have grown, as have vivo's sales.
Maybe somewhere in these numbers lies the Chinese recession, but it is clearly selective: it helps Chinese smartphone manufacturers and hurts foreign ones.
By the way, Samsung in its press release, published on January 4, behaved much more honestly than Apple and pointed to the only true reason for the decline in smartphone sales in China: "the intensification of competition in the specialized market." For this honesty, the market thanked Samsung with moderate growth.
The real reason for the decline in iPhone sales is that local Chinese manufacturers have been selling equipment with an incomparably better price / quality ratio for more than a year.
Against the backdrop of complete technological parity, all Apple has left is the prestige of the brand, for which the people of Cupertino demand more and more money from year to year.
At some point, Chinese consumers decided that the iPhone could not and should not cost $ 1269 (the local price for the iPhone XS 64GB), and switched to the top flagships of national manufacturers. That's the magic of falling iPhone sales. No recession and no Trump.
To be sure, the inability of Apple and Samsung to continue to sell their top-of-the-line phones in China is much more monumental.
Here is the absolute saturation of the smartphone market. This is where technologies reach the level of maximum satisfaction of user desires - it is for this reason that buyers stopped updating their gadgets two, three or four years ago.
And yes! - users really prefer to change batteries, and not pay 1000 dollars every year for a new model, which does not differ qualitatively from last year.
There is no doubt that the companies that control the market will not give up without a fight and will die with the bones, just to return the faithless flock to the only possible paradigm for modern consumerism - an incessant series of new and new purchases.
Photo: Reuters There are two ways to achieve this goal. We would be very lucky if Apple (as well as other manufacturers) adopt a trading scheme similar to Samsung Forward, which allows the user to upgrade their flagship smartphones annually in exchange for recurring payments.
The amount of monthly payments from Samsung still looks wild (from 3,790 rubles), but if this scheme is supported by other manufacturers, one can hope that average price offerings on the market will quickly drop to attractive levels.
An alternative scenario for the possible development of events in the smartphone market is less radiant. If the refusal of consumers to voluntarily upgrade becomes a dominant trend, smartphone manufacturers may try to "push" us to this upgrade technically. For example, by drastically lowering the service life limit of any key components. And then, you see, in a year the Bluetooth module will “unexpectedly” be covered in the smartphone, broken pixels will crawl across the screen, the battery will fail, etc.
Apple, by the way, already has experience of such shenanigans: in 2017, users began to notice that as the batteries in the iPhone 6, 6S, SE and 7 models not only decreased battery life, but also somehow suspiciously began to decrease performance processor. From which it was concluded that
At the software level, Apple deliberately makes work on old smartphones unbearable, thereby pushing consumers to a forced upgrade.
Just after this scandal, Apple, in an effort to improve its image, lowered the cost of battery replacement services at authorized centers by $ 50.
I believe, however, that the scenario with forced upgrades is more of a conspiracy thesis. If only because smartphone manufacturers will be dragged around the courts, and in the conditions of American case law, they will be ruined in no time.
So the scheme with "perpetual leasing" remains - promising for consumers, as well as able to keep the smartphone market afloat for more than a decade.
Hello dear reader!
My review today will reveal the reasons why Apple stock fell by stock exchange... I will tell you in detail about the factors responsible for the falling quotes, consider the retrospective data and outline the future prospects of the IT industry giant.
What is the reason for the rapid fall in Apple shares at the end of last year? Why did it happen? First of all, this is explained by the falling sales volume. In September 2018, the company introduced a new line of smartphones: iPhone XR, iPhone XS and iPhone XS Max.
The developers expected an influx of buyers, but in reality it turned out differently. In the United States and China, the demand for new models has reached a minimum in recent years.
The sales report contains disappointing forecasts for the IV quarter. This makes sense when you consider that the share of the iPhone in the total revenue of Apple is about 60%. In addition, suppliers of components for smartphones have announced a drop in forecasts.
In the past year, the largest companies in the IT industry also experienced a fall in their shares: Google, Amazon and Facebook. However, Apple shares fell the most. This immediately affected the ranking: leadership in the list of the most valuable corporations in the world was lost.
The losses of the giants are associated with the shifting of investors' attention to enterprises from traditional sectors of the economy. The declining sales volumes of tech companies pushed them to look for alternative sources of profit.
The second and no less compelling reason for the fall in Apple stock prices in 2018 lies in the outbreak of a trade war between the United States and China. Further deepening of the crisis in relations between the two countries will hurt Apple's position, since 1/5 of its customers live in China. Moreover, iPhones and most other devices are assembled in this country.
What's happening with Apple stocks now
Apple securities fell in value also due to rumors: experts predict a rise in the price of smartphones after the increase in duties amid the ongoing trade war with China. This will negatively affect the level of demand.
In early June, after the news of a possible cut in the key rate of the Federal Reserve System, US stock indices rose. After this news, traders started buying risky assets. Analysts believe that this compensates to some extent possible losses from the escalation of tensions between the United States and China.
Despite a 27% rise since January, most analysts recommend buying Apple shares. The current situation makes it possible to buy the company's securities at an affordable price.
Stock price on the stock exchange: online chart
Course dynamics for all time
More recently, Apple stock quotes painted bright prospects. As a result of trading on August 2, 2018 on the American NASDAQ stock exchange, the cost of one security reached $ 207.39. As a result, Apple became the first company in the world with a market capitalization of US $ 1 trillion: this amount was obtained by multiplying the total number of shares (4,829 million shares) by the unit value at the end of the trading day.
The third quarter was closed with positive indicators: compared to 2017, revenue increased by 17%, and the growth of net earnings per share was 40%.
On October 3, the price of one share was fixed at a record $ 233.47. However, in the future, the rate fell sharply: securities fell in price by 29%. The majority of shareholders have suffered significant losses. The results of the year were disappointing.
What affects the share price
The main factors affecting the value of shares:
- profitability;
- industry situation;
- the future of the company;
- the level of competition;
- world politics news;
- domestic policy of the country.
By carefully analyzing these factors, you can find a reliable answer to the question: "Will stock prices fall again or will the situation stabilize?"
Company perspectives
For the first quarter of this year, Apple achieved the following financial indicators (compared to the same period last year):
- gross revenue - USD 58 billion, or 5% less;
- net profit- USD 11.6 billion, down 16%;
- earnings per share - $ 2.46, or 10% less.
It is worth noting that Apple has reached the target of revenue, set in the range of 55-59 billion US dollars.
In three months of 2019, the company sold $ 31 billion worth of iPhone smartphones. Compared to the first quarter of the previous year, sales fell 17%. The main reasons for the falling demand:
- People are much less likely to update their mobile phones.
- Competition from Chinese manufacturers who produce cheap models.
As a result, the share of the iPhone in the total revenue structure fell from 60% to 54%. The lost profit from the sale of smartphones Apple compensated for the sale of services.
The company plans to stabilize the situation through the following actions:
- Provide discounts for iPhone owners when purchasing new models.
- To release credit card for users of their products with 2% cashback.
- Expand the list of paid services.
This year, the IT giant unveiled its new applications: the Apple Arcade gaming platform, the Apple TV + video service and the Apple News + news service.
At the end of the second quarter, gross revenue is projected in the corridor from 52.5 to 54.5 billion dollars, which is slightly more than last year. Another positive news is that Apple intends to increase its dividend payout by 5%.
Despite the crisis, the development of innovative products continues. So, in 2020, the release of iPhone smartphones equipped with 5G modem chips will be launched.
It is, of course, too early to say that the worst is over for the company. However, there are also positive shifts. The management is actively developing the service sector: mobile payments, app store, online music and cloud storage. Due to this, the company is going to raise about 50 billion US dollars.
Apple also intends to continue diversifying its revenue and plans to become a major digital services provider.
Analytics and forecast for paper
Analysts predict that the rate will go up again: an increase of 20% is expected over the year.
The growth will be supported by the publication of the report on income for the first quarter, which exceeded expectations, as well as the forecast of profit for the second quarter. The target price per share by the end of the year is $ 216.
Alternative in this industry
Apple's main competitors in the smartphone segment are South Korean Samsung and Chinese Huawei. Samsung ranks first in the world in terms of sales. Apple is next, and Huawei closes the top three. However, by the end of this year, the Chinese manufacturer may squeeze out the American holding.
In Russia, Huawei overtook two recognized giants at the end of 2018 and became the leader in terms of sales. A total of 8 million smartphones were sold against 3 million a year earlier. Further growth of the Chinese company may be hampered by a trade war: the United States has blacklisted Huawei and its many partners.
In addition, Google, the developer of the Android operating system installed on the phones of the Chinese manufacturer, refused to cooperate with them. Refusal to supply updates for existing smartphones and to equip the operating system of future models may cause a drop in Huawei's position.
Google is Apple's main competitor in the mobile operating system market. Android and iOS for two occupy 99% of the mobile market. At the same time, Android, due to its compatibility with different manufacturers, is several times ahead of iOS in terms of the number of users. Analysts expect the system to maintain its leading position, with an impressive 79% market share.
The interests of Apple and Google also overlap in the online payments market. Another competitor in this industry is PayPal.
Conclusion
In my opinion, multi-vector as new strategy development will help Apple regain lost ground. Now the main factor for the company is the "Chinese" factor: the future profits of one of the leaders of the IT industry depend on the course of further negotiations between the two world powers.
Now is the right time for those wishing to profitably buy Apple stock. However, the positive results of the first half of the year may immediately affect the growth of quotations. For those investors who work for the long term, it remains to wait for the situation to improve.
If you liked my review, subscribe to the site and stay up to date with all the news. Until next time!
Apple's capitalization is about $ 900 billion. This is far from over $ 1 trillion, like last summer, but still we have one of the largest companies in the world.
Warren Buffett gave Apple Giant approximately 25% of Berkshire Hathaway's portfolio, based on investments in publicly traded stocks. However, in February it became known that Berkshire had cut positions at Apple.
In the fall of 2018, AAPL shares lost about 40%. Since January, the securities began to actively recover. Before us is no longer 100% "history of growth", but also not fully "stocks of value". Is it worth investing in Apple now, or is it better to play the fall? This review will provide an answer to the indicated question.
Financial performance
The financial statements for the first financial quarter published at the end of January inspired investors to buy. Formally, the data is not strong. But market participants were relieved as they feared even more negative after the release of the company's weak forecast and the appearance of negative messages from its suppliers.
Quarterly revenue decreased by 5% compared to the same period a year earlier, to $ 84.31 billion. Profit decreased from $ 20.07 billion to $ 19.97 billion. This happened for the first time in the last 10 years in the first quarter of the fiscal year, when Christmas and New Year holidays are celebrated ... One of the factors behind the decline in revenue was the devaluation of the currencies of many developing countries, primarily the Turkish lira. In response to the current situation, Apple management decided to reduce the prices of the IPhone in countries with weak national currency, said the head of the company Tim Cook.
Source: zerohedge.com
IPhone revenue dropped 15% year-on-year to $ 51.9 billion. According to Cook, the weak Chinese economy has hit sales in the region, which is the world's largest smartphone market. In the first financial quarter, the revenue of Apple's Chinese division decreased by 26.7%. The company also said that sales for the current quarter are likely to be lower than Wall Street analysts expect, indicating continued weakness in iPhone demand, particularly in China.
Source: zerohedge.com
Other segments of the company were more successful. Service revenue hit a record $ 10.9 billion, up 19% over the previous year. This segment accounted for 14% of Apple's revenue, with 63% for the iPhone. Mac and wearable, home and accessories revenues also hit record highs, rising 9% and 33%, respectively, while iPad revenues were up 17%.
Dividends and buybacks
As a result of the tax reform, Apple was able to repatriate "foreign cash" at a preferential tax rate. The funds are used to pay dividends and implement the buyback program. Previously, this was done using a bond placement scheme at ultra-low interest rates in the United States. As a result, the company has about $ 101 billion in bonds in circulation, and in the first financial quarter it finally began to pay off its debt.
Source: Reuters
Analyst's median target for Apple is 12 months. is $ 195. Based on this criterion, the securities are already quite fairly valued by the market.
There are risks, however, the company is financially stable and rich in cash. It is quite possible to buy on Apple's drawdown. For medium-term purchases, I would wait at least $ 180. The $ 165 level will allow you to more confidently enter long positions.
Read the best materials on the American market at
Apple chart since 2017, daily timeframe
