Apple has been or has been hovering around the most valuable company on the planet, question is why?
Apple’s revenues have looked healthy for the last few years, good gains year on year. However is this because of their margins increasing over the same period?
I would have to say yes because their units sold figures have been flat https://www.statista.com/statistics/276306/global-apple-iphone-sales-since-fiscal-year-2007/
Apple almost at 240 Dollars per share
In short, does Apple have a competitive advantage anymore?
I don’t think so
Apple has always been an ideas company, not a product company
What products does Apple have these days that are different from anything else in the market?
When Apple brought out the graphical interface for home computers, it was the first of it’s kind
When Apple brought out the iPod, it was the first product of it’s kind.
Combined with first of it’s kind iTunes, a killer combination
When Apple brought out the iPhone, it was the first product of it’s kind
What does Apple have now?
Airpods? Nice idea but revolutionary? No. Plus easy to copy.
Apple TV? Already a crowded market.
Wearables? Crowded market. And easy to copy.
Competition? Absolutely. Apple has stiff and growing competition in everything from their AirPods to their iPhones.
Especially competition in smartphones.
Smartphone competition is only going to get worse for Apple. Technology is going to progress and you can easily see in 2 or 3 years a hundred dollar smartphone is going to be able to run any software you can expect and the camera technology is going to be very close to what Apple has now.
Where is the market going to be for Apple iPhones in 2-3 years let alone 10 years.
Smartphones and their technology and going to become a commodity.
Can Apple survive if it is forced to charge 200 dollars for their latest iPhone?
I don’t think so. Let me rephrase that, I’m sure they will survive but at today’s stock price? I can’t see it.
If Apple’s revenues have been increasing over the past few years because they have increased their margins, what is going to happen if they start reducing their margins by charging less for the iPhone?
And this is why I would sell Apple stock as fast as possible
I do not see any upsides for this company, only downsides
What could change things?
As I said, Apple has always been an idea company, if they can come up with something new then sure, their stock price can rise but I see absolutely no innovation coming from Apple.
Streaming TV and wireless headphones just don’t cut it. And neither does a thousand dollar smartphone when you compare it to even today’s 300-400 dollar smartphone running Android
To sum it up
Apple is an ideas company, always has been, without ideas they can’t be valued as an ideas company forever.
Their stock price today is an revolutionary ideas company price. Without ideas, revolutionary ideas, their stock price can only go one way.
To maintain their valuation they need the same thing that took them to that price to begin with otherwise the air is going to leak out of the balloon and I wouldn’t want to be in the basket when it hits the ground.