Apple (NASDAQ: AAPL) presented on Tuesday (January 27th) the largest quarterly profit that a company has ever reported, $18.04 billion. (The previous record was held by Gazprom that earned $16.24 billion in 90 days.) Apple's profit was $5 billion more than last year, to put it in perspective, Microsoft's entire quarterly profit was this year $5.8 billion. The majority, more correctly 69%, of Apple's revenue came naturally from iPhones sales. Apple sold incredible 74.5 million iPhones in the fourth quarter of 2014, in other words, 34,000 iPhone every hour, around the clock. Wall Street was expecting 65 million, it was only a few individual analysts who predicted that Apple would sell over 70 million iPhones. Tim Cook, Apple's CEO said the following. "Our revenue grew 30 percent over last year to $74.6 billion, and the execution by our teams to achieve these results was simply phenomenal." And now have several of the analysts on Wall Street raised the target price for the shares to between 130 and 150 dollars. Carl Icahn, the billionaire who previously bought 45 million Apple shares, however, considers that the analysts target prices are far too low. Self, he expects that the shares will rise to at least $203. (At the end of this post will you see a technical analysis of the stock.)
In the chart above, we see an impressive graph of their products shipments, check the yellow course that represents the iPhone units. Apple sold 74.5 million iPhones, 21.4 million iPads, and 5.5 million Macs. All figures have risen compared to Q1 2014 except for the iPads, probably it's because the iPhone's larger screen. Especially China seems to have helped Apple with their super-quarter. Although the iPhone is more expensive than popular Android phones, are lots of iPhones bought in China. I think it's because iPhone offers a unique experience in both software and hardware that no other Android phone does. China accounted for $16.14 billion of Apple's revenue, which is an increase of 157% compared with the previous quarter and up 70% from the same quarter last year.
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It's precisely in Asia that Apple has growth opportunities, but many believe that this was the last time we saw a blowout quarter for iPhone sales. A claim is that everyone was waiting for an iPhone with a larger screen and now will users not upgrade to the new iPhone as often. Others believe that iPhone users will eventually buy Androids, such as Xiaomi smartphones which only cost half as much as an iPhone. But there is clear evidence that iPhone users are very loyal and that it's unlikely that users switch to other phones. I think the Apple ecosystem is so strong that people think it's worth paying a premium for their iPhone.
You can clearly see this by looking at the diagram on the right. If you only analyze the iPhone price they must be damn much better than other mobiles because consumers choose them, even though, the high price. Others who are bearish on Apple believes that the company is so large that they will not be able to grow as fast in the future, that you can not grow faster than the market. I understand those who argue in this way, but the truth is that there are still good growth opportunities for sales of iPhones. Apple is also entering new markets which will reduce their reliance on iPhone income and diversify their revenues. We must remember that Apple always operates in a safe way because they value quality, this means that everything takes more time. They put all of their time and effort in a few products instead of doing many things, this means that investors need to be more patient.
Apple has the recent year been in a bullish trend and it seems to continue.
Apple's new products, Apple Pay and Apple Watch, don't seem to have had any problems so far. Apple pay has moved forward very strongly since the service was introduced in October 2014. Apple Pay accounted for 2/3 of all contactless payments in the US via Visa, MasterCard, and American Express. But Tim Cook said that it's 2015 which will be the big year for Apple Pay. For example is support for Apple Pay now coming to 200,000 vending machines across the United States. Tim Cook also revealed that Apple Watch is shipping in April. I think that if everything goes as it should, does Apple have a good chance to capture the majority of the market for smart watches (which is expected to be enormous). Since this is the first watch they will make, I believe the biggest risk is that a manufacturing problem arises (so that it's delayed) or even worse that it occurs after the watch has been shipped. Further, will Apple Watch only work with an iPhone and this will make Apple's ecosystem further stronger. Apple Watch could boost iPhone sales in the future because they will have a cheaper product which reduces the entry barrier to their ecosystem.
Lastly, have I made a simple technical analysis of the stock. In the picture above can you see that Apple have the recent year been in a bullish trend and it seems to continue. We also see that the stock today (2015-01-08) struck through the roof (share rose +5.65%) and it looks like that consolidation will pass to a rising trend (resistance will probably be a support then). If we then check the bottom of the MACD, we see that the blue line (EMA-12) has broken up by the orange line (EMA-26) this shows a positive trend is about to start. I will in a post in the future provide a more thorough description of technical analysis. This is a very simple technical analysis, but it's clear that Apple have a bullish trend, however, it's important if you are new to the stock market to invest for the long term. I have written a post where I explain why you should buy Apple for a long-term investment, you can read it here: My First Stock: Apple
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