The STRIDE Blog

What’s in Store for Apple’s Future?

stride-the-future-of-apple-featured.jpgBy now I expect that everyone’s tired of hearing about Apple. Yet, there’s no denying that the company’s future is tied to a big portion of the tech industry… and their future is rocky to navigate at present. 

Depending on what you’re looking at, the current tech market can seem to be in a bit of a slump. The Nasdaq was flat on Monday morning, and had been falling for 7 days prior, mainly due to unfortunate reports from Microsoft, Google, and, the ever important tech giant, Apple.

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Despite the seemingly late failure of the tech market, is their unique drop in iPhone sales and consumers’ mixed reaction to the iWatch reason enough to go bearish on Apple? We don’t think so.

Our Understanding of Apple

Our stance hasn’t changed much since we last wrote about Apple, but the information has, and so our view has become a bit broader.

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We still believe that Apple is being undervalued at present. A couple of months ago, we recommended “waiting for the market to react to this discount before wading in”, and we still hold to that.

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We recommend holding for now, and watching the market closely. What still seems apparent to us are our views in a previous article shared, where we spoke about Apple being undervalued due to their broader product market. Sure, iPhone sales have accounted for a major portion of their recent revenue, and these sales have taken a nearly unprecedented knock of late… but still Apple Store sales are overlooked.

What Apple’s Future May Be

Yes, the Nasdaq has been a bit frightening to follow lately, particularly from the sharp lows it reached in February. In fact, Apple’s stock has slid by 10% since their fiscal second-quarter report. But, so far as Apple is concerned, we believe this is largely a case of market indecision and undervaluation of their stock.

The iWatch, although making considerable profit, has not seen nearly as much traction as the iPhone or iPad had in early consumer purchases… however, the consumer market did take some time to warm up to both the iPhone and iPod, and so casting the iWatch aside so soon is a blind decision. Despite this, Apple has been relatively good at diversifying their investments when you consider the monetization of their subscription services (iStore) and their increasing secondary media services (AppleCare, Apple Pay and iTunes).

In the US, Apple saw downloads drop 20%, but revenues rose by 20%. This allows us to draw a picture of consumers who are more selective in what they download, but are also far more willing to pay for quality when they find it,” says our founder, Scott Nursten. 

No one can say it’s been an easy ride staying with Apple this year, or that their near future is overly promising, but the company’s strong history and undervalued revenue streams make us recommend holding for a while still.

Topics: Valuation, Commentary

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