Apple financing outlook: no money to buy iPhone, how does Apple support its stock price?
Report period: 2020 fiscal year fourth fiscal quarter
Financial statement release time: October 29 (Thursday) post-market
Expected revenue: $63.98 billion
Expected per share revenue: $0.71
VNSMART- Apple announced its fourth-quarter financial report for fiscal year 2020 on October 29. Investors’ focus are expected to the demand of company new products, including 5G iPhone.
Earlier this month, Apple launched four iPhones in an attempt to break the cycle of weak growth of its flagship products. All new iPhones support 5G technology, and its data transmission speed is 10 times faster than the current 4G LTE technology.
At the same time, Apple has drastically changed the appearance of the iPhone 12, making it look flatter and reminiscent of the iPhone 4. The price of the new iPhone is roughly the same as last year, and the iPhone 12 Mini is the cheapest model.
Apple tried to boost the performance of its most profitable business with the new iPhone after iPhone sales peaked three years ago. However, a public health incident caused millions of people to lose their jobs, making it difficult for more and more people to afford expensive iPhones. This pus up the uncertainty of iPhone business prospects.
However, many analysts believe that the competitive pricing of Apple's latest models and the support of faster 5G networks may attract the fans to upgrade iPhones in large numbers, thus opening a new "super cycle" for the iPhone.
Diversity pays off
Despite public health crisis cause negative impact, but some analysts are still optimistic about Apple and recommend that investors continue to buy Apple, even if its stock price has risen by 60% this year.JPMorgan Chase analysts believe that it is right to bet on Apple considering the combined impact of a variety of positive factors.
JPMorgan Chase said that strong demand for old and new iPhones, the best wearable device experience, and strong growth and flexible service products are all supporting Apple's performance and stock price.
Even if public health incidents and the global economic recession cannot provide enough motivation for Apple’s new iPhone sales, but Apple smoothly promoted its strategy of reducing hardware dependence and promoting diversification.
Apple CEO Tim Cook has very successfully taken advantage of Apple’s huge ecosystem,
through the App Store, streaming music and wearable devices including Apple Watch and other businesses to promote revenue growth.
Although the performance of the iPhone business has stagnated, the new areas mentioned above have grown strongly.In the last fiscal year, the wearable device category increased by 40%, and service business revenue also increased by 16.4%.
And there is no reason to think that the expansion of these businesses will slow down quickly, especially during the epidemic, when consumers are trapped at home and no longer go to physical entertainment venues. In order to seize this opportunity, Apple launched the "Apple One" subscription package last month, which integrates multiple services such as Apple Music, Apple TV+ and iCloud cloud storage, which a price lower than the sum of the prices of all services.
Even though Apple's stock price has risen by 60% this year, Apple is still an attractive stock. Apple's innovation ability, growing service business and wearable device business are all solid reasons to continue to see Apple. Even if the iPhone has not yet started a new super sales cycle this quarter, Apple still has the potential to earn a lot of revenue from its existing user base. We believe that it will be a good buying opportunity if Apple's stock price drops after the financial report announcement.
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