How much a stock’s price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.
What if you’d invested in Apple (AAPL) ten years ago? It may not have been easy to hold on to AAPL for all that time, but if you did, how much would your investment be worth today?
Apple’s Business In-Depth
With that in mind, let’s take a look at Apple’s main business drivers.
Apple’s business primarily runs around its flagship iPhone. However, the Services portfolio that includes revenues from cloud services, App store, Apple Music, AppleCare, Apple Pay, and licensing and other services now became the cash cow.
Moreover, non-iPhone devices like Apple Watch and AirPod gained significant traction. In fact, Apple dominates the Wearables and Hearables markets due to the growing adoption of Watch and AirPods. Solid uptake of Apple Watch also helped Apple strengthen its presence in the personal health monitoring space.
Headquartered in Cupertino, CA, Apple also designs, manufactures and sells iPad, MacBook and HomePod. These devices are powered by software applications including iOS, macOS, watchOS and tvOS operating systems.
Apple’s other services include subscription-based Apple News+, Apple Card, Apple Arcade, new Apple TV app, Apple TV channels and Apple TV+, a new subscription service.
In fiscal 2020, Apple generated $274.52 billion in total revenues. The company’s flagship device iPhone accounted for 50.2% of total revenues. Services, Mac, iPad and Other products category contributed 19.6%, 11.2%, 8.6% and 10.4%, respectively.
Apple primarily reports revenues on a geographic basis, namely the Americas (North & South America), Europe (European countries, India, Middle East and Africa), Greater China (China, Hong Kong & Taiwan), Japan and Rest of Asia Pacific (Australia & other Asian Countries).
In fiscal 2020, Americas, Europe, Greater China, Japan and Rest of Asia-Pacific accounted for 45.4%, 25%, 14.7%, 7.8% and 7.1% of total revenues, respectively.
Apple faces stiff competition from the likes of Samsung, Xiaomi, Oppo, Vivo, Google, Huawei and Motorola in the smartphone market. Lenovo, HP, Dell, Acer and Asus are its primary competitors in the PC market. Other notable competitors are Google & Amazon (smart speakers) and Fitbit & Xiaomi (wearables).
Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in Apple ten years ago, you’re likely feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in July 2011 would be worth $11,149.68, or a gain of 1,014.97%, as of July 9, 2021, and this return excludes dividends but includes price increases.
The S&P 500 rose 221.54% and the price of gold increased 12.25% over the same time frame in comparison.
Looking ahead, analysts are expecting more upside for AAPL.
Apple is benefiting from continued momentum in the Services segment, driven by App Store, Cloud Services, Music, advertising and AppleCare. Apple’s near-term prospects are bright, driven by new iPhones that support 5G, revamped iPad and Mac line-up of devices, healthcare-focused Apple Watch, and an expanding App Store ecosystem. Apple’s ability to attract small developers has been a key catalyst. Moreover, Apple devices continue to gain traction among enterprises. Apple’s focus on user privacy, as reflected by its latest iOS 15, iPadOS 15, macOS Monterey, and watchOS 8 updates, is a game changer. However, Apple refrained from providing any guidance due to uncertainties triggered by the COVID-19 pandemic. Moreover, increasing scrutiny and legal woes over App Store are headwinds. Shares have underperformed the S&P 500 year to date.
Over the past four weeks, shares have rallied 13.58%, and there have been 1 higher earnings estimate revisions in the past two months for fiscal 2021 compared to none lower. The consensus estimate has moved up as well.
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