iPhone sales have slowed down because the interval between user upgrades has become longer, but Apple’s first batch of 5G version iPhones scheduled to be released this fall may be about to usher in a major upgrade cycle.
Tencent Securities, July 28, after the recent correction in the U.S. stock market due to the new crown virus pandemic, Apple’s (NASDAQ:AAPL) stock price soared as investors flocked to high-quality companies. Analysts hope that when the global economy recovers from the new crown pneumonia epidemic, the financial situation of the consumer electronics giant will quickly improve. As Apple’s stock price rises, a question that many investors want to know is whether Apple’s stock is now worth buying.
There have been several success stories of Apple in the United States. First, the company ignited the personal computer revolution with the Apple II in the 1970s; then in the 1980s, the company redefined the personal computer with the Macintosh.
Co-founder Steve Jobs returned to Apple in 1997 and guided the company through a series of successful innovations, including iMac, iPod, iTunes, iPhone, iPad and App Store.
Judging from recent history, the biggest driving force for Apple’s success is the iPhone. This pioneering smartphone debuted in 2007, triggering years of large-scale growth and creating a willingness to buy Apple products and A loyal customer base for services. However, iPhone sales have slowed down because the interval between user upgrades has become longer. However, the company’s first batch of 5G version iPhones scheduled to be released this fall may be about to usher in a major upgrade cycle.
Apple related news: Will the 5G iPhone be delayed?
Apple usually releases the latest iPhone in September, but market uncertainty related to the new crown virus pandemic may cause its release to be delayed.
On June 4, wireless chip maker Broadcom (NASDAQ: AVOG) said that Apple will delay the production of the next-generation iPhone by about one month. This news supports earlier media reports about Apple’s delay in releasing the iPhone 12 series of mobile phones due to the interruption of production in Asia and the weakening of global consumer demand due to the new crown virus pandemic.
However, recent reports from Apple’s supply chain indicate that the company re-plans to launch the latest iPhone in September. Analysts predict that the iPhone 12 series phones will include both 4G and 5G versions.
Prior to this, on April 15th, Apple launched a lower-priced smartphone aimed at budget-conscious consumers and emerging markets. The starting price of the second-generation iPhone SE is $399.
On June 22, Apple held its annual global developer conference. Affected by the new crown pneumonia pandemic, this year’s meeting changed from a face-to-face meeting to an online meeting. In the opening keynote speech of the conference, Apple executives said that the company will abandon Intel processors and switch to self-developed processors for its Mac computers. In addition, they also released the latest software for iPhone, iPad, Mac, Apple Watch and Apple TV set-top boxes.
Apple’s iOS14 smartphone operating system will include a more customizable home screen, improved Siri help, enhanced privacy features, and a mini application called App Clip. In addition, the latest operating system scheduled for release this fall will also include improvements to maps, messages and other applications.
Apple’s growth opportunities
With iPhone sales growth slowing, investors want to know what is the next major growth driver for Apple stock. Recently, two businesses have boosted Apple’s sales and profits, namely the service business and the wearable device business.
In the second fiscal quarter ending in March, Apple’s service revenue increased by nearly 17% year-on-year to $13.35 billion. Its services include App Store, AppleCare, iCloud, Apple Pay, Apple Music, Apple TV+, Apple Arcade, and others product.
On April 21, Apple launched a major international expansion of its service products, bringing the App Store, Apple Arcade, Apple Podcasts and iCloud to another 20 countries, and Apple Music to another 52 countries.
At the same time, sales of Apple’s wearables, home and accessories division jumped 22.5% in the last fiscal quarter, reaching $6.28 billion. Products in this department include wearable devices such as Apple Watch, AirPods wireless headphones and Beats headphones, as well as Apple HomePod wireless speakers and various other devices.
Apple earnings report: Earnings exceed expectations, no performance guidance is provided
On April 30, the Cupertino, California-based company announced a better-than-expected second-quarter financial report, but declined to provide performance guidance.
In the second fiscal quarter ended March 28, Apple’s earnings per share were US$2.55 and sales were US$58.31 billion. In contrast, analysts had predicted that its sales would reach US$54.54 billion, and earnings per share would reach 2.26 USD. Compared with the same period last year, Apple’s earnings increased by 4%, and sales increased slightly by 1%. In addition, iPhone sales this quarter fell 6.7% to 28.96 billion US dollars, Mac computer sales fell 2.9% to 5.35 billion US dollars, iPad tablet sales fell 10.3% to 4.37 billion US dollars, but the service and wearable device business growth Help offset the negative effects of these declines.
At that time, Apple did not provide guidance for the third fiscal quarter ending in June on the grounds that the new crown virus pandemic has brought market uncertainty. The company plans to release its third-quarter results on July 30. On average, Wall Street predicts that its earnings per share will reach $2.02 and sales will reach $51.75 billion, compared to the company’s sales of 538.1 in the same period last year. Billion US dollars, and earnings per share were 2.18 US dollars.
Analysts speculated that, given that the iPhone 12 mobile phone may be delayed, Apple may not give guidance on its fourth-quarter performance.
Investor Business Daily’s score on Apple stock
Since the new crown virus caused the stock market to crash and rebound, Apple stock has performed better than the market.
Apple’s IBD (Investor Business Daily) relative strength score is 90 points (out of 99 points), which puts it in the top 10% in the past 12 months.
Apple is the first company with a market capitalization of more than $1 trillion. Since reaching this milestone in August 2018, Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN) and Google’s parent company Alphabet (NASDAQ:GOOGL) have all joined the trillion-dollar market capitalization “club.”
In early June, Apple became the first company with a market value of more than $1.5 trillion, and Amazon and Microsoft subsequently broke through this barrier.
Technical analysis of Apple stock
According to the chart of IBD MarketSmith, on April 29, Apple stock broke away from the bottom of the second stage of the cup-and-handle pattern. The purchase point was $288.35, and it has since risen sharply.
It can be seen from the weekly MarketSmith chart that Apple stock has subsequently broken through the secondary buying price ($319.79) of the cup handle pattern. On July 13, Apple’s stock price hit a record high of 399.82 intraday.
Is Apple stock worth buying now?
For now, Apple stock is not worth buying, and its transaction price far exceeds the 5% chasing area last time. In addition, according to the IBD trading guide, Apple’s transaction price is higher than the 20% to 25% profit-taking area that broke through on April 29.
Apple stock will need to form a new foundation under suitable market conditions before setting new potential buying points.