Compared with the high reached before the release of iPhone 5, Apple (AAPL) stock price has fallen by approximately 10%. Many reasons resulted in the decline in Apple stock price, such as the last major stimulus, the release of iPhone 5, has become the water under the bridge. The preliminary sales of iPhone 5 were disappointing and Apple’s profit margin is facing significant pressure.
To Apple’s investors, the good news is that Apple stock is still not expensive – although the company has achieved astonishing growth, but its stock has never been over-priced. Apple stock price has climbed 80% over the past year, making tApple become the company with the largest market capitalization in the world. The current Apple stock price of $635.85 is around 15 times the trailing earnings, roughly flat with the long-term average.
The products developed by Jobs and his top engineers and designers, are still earning banknotes for the company continually, and its is expected that Apple will not lose this ability within the next few years. In addition, the company is also expected to grow much faster than other companies. Therefore, it seems that Apple stock price is facing mixed situation, not all bad news. Apple will release the third quarter earnings results two weeks later. If the results show strong iPhone sales, then investors may become active again.
According to the report of MarketsandMarkets, the global mobile phone market volume will reach $341.4 billion in 2015, and smart phones will account for 75.8% share of the market. Although Apple will not be the largest company in market share, but its sophisticated supply chain will be able to ensure it to get a high enough profit. This is also the type of company favored by Wall Street.
For the U.S. market, Apple may have been very difficult to obtain a high growth, while in the Chinese market, Apple has been performing strongly all the time. There is still great potential for Apple to explore as there are only four official Apple Stores in the mainland of China.
Another important product must be mentioned is iTV. Did not to capture the living rooms of the users is perhaps one of the pities of Steve Jobs, but as spread of the concept of smart TVs, Apple may attack this market again. But, Barclays Bank analyst Ben Reitzes published research report, saying the next revolutionary product of Apple may be TV controller, instead of TV. In August, there were rumors that Apple would provide set-top box with the support of cloud-computing DVR for cable TV companies. It was said that the negotiations are still in progress,and its is expected that the related parties will not reach an agreement until 2013. Reitzes reiterated his buy rating on Apple stock and set a target price of $810 on this stock.
To the current product line of Apple, mobile phone, tablet and Macbook series can be well integrated with smart TV, and easily help the user form a complete and seamless experience. iTV may be fighting single-handedly in the past, but now Apple has a more and more advantages in its growing ecosystem. This power can help the company better open up a new market.
The biggest threat to Apple stock price is if Applet makes a mistake, and falls short of Wall Street’s expectations, it will give competitors a chance to and result in the misgivings of investors, more likely leading to a domino effect.