Is Apple a Value Stock Or A Value Trap???
Despite becoming the world’s first trillion-dollar company this summer, Apple ended 2018 down 7%, its worst year since the financial crisis of 2008. It seems like the beginning of the end for Apple in 2018 was when it announced its fourth quarter earnings report, in which Apple announced it would stop reporting
individual unit sales and revenue figures for the iPhone.
Shares of Apple have fallen from a high of $234 at to sub-$150, a 37% decline in just a few months. And in the process, Apple lost it’s #1 market cap status to Microsoft, but now has a lower valuation than Microsoft. Apple now has a P/E of 12, cheaper than the S&P 500 and near the lower end of its 10-year range.
So is Apple a value stock again or a value trap? Well many Wall Street analysts still have a median of over $200 (and has high as $300) as a twelve month price target.
Apple still gets the bulk of their revenue from the iphone. But the iPhone XS is basically the same things as the iPhone X. And Apple has been basically releasing the same phone since 2014 with incremental improvements and lackluster new features. It’s the reason why sales have decreased and Apple was forced to lower the prices on the newest phones.
The rest of the world is catching up to Apple and unless they take some risks and innovate like they did during the Steve Jobs era, the stock price is at risk of further declinesI see further declines despite their incredible stock buyback program and despite Buffett supporting Apple with his wallet. So how low can Apple go, lets go to the charts to find out?
Price recently bounced off of the monthly demand at $145.
The first test for Apple will be the daily supply at $172.
However, if the monthly demand at $145 is breached, the chart suggests price can fall down to the monthly demand at $93.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
They will need to start using their huge cash balance to bring additional innovation or streams of income in order to sustain their growth or they will lose that P/E premium...
Posted using Partiko iOS
Great point, I guess they can also buy innovation with that bank of cash.
The trade war with China isn't helping Apple's popularity . Although their products are easy to use, they are overpriced. I don't think their cash reserves, which are already priced in, will help out compete rivals, Samsung, Huawei, LG, and others all have deep pockets. Not to mention Microsoft, Google, IBM and others.
Their marketing gig won't last forever and as interest rates rise I'm not sure how many people will be able to afford a new 1k phone every year. I'd prefer 3k in Steem any day.
Yes, I heard China was telling their citizens to ban Apple products as well recently.
It is hard to always innovate and keep the machine going. :)
Posted using Partiko Android
Agree, but what risks have they taken in recent years?
They just play safe in their comfort zone, anyway I am not a fan of their products!