Why I’m Bullish on AAPL Stock
Apple Inc. (NASDAQ:AAPL) has drawn a lot of media attention recently. The company’s showdown with the FBI has made for excellent headlines, but I’m more interested in what it could mean for AAPL stock. Is it a good thing or a bad thing?
There’s the conspiracy theorist angle on this story, which is that making enemies of the government could seal Apple’s doom. “The big bad FBI” could make a lot of trouble for the company, say the loony tunes with their tin foil hats.
Sorry to let facts get in the way of a good story, but that’s not going to happen.
Not only has Apple rallied public support to its side, but also the FBI had to backtrack and admit its mistakes. The FBI made a key error in the aftermath of San Bernardino. Apple says it was that mistake that unraveled the entire situation, leading to Apple’s refusal to unlock the phone and the Apple FBI lawsuit.
Here’s what happened…
After the tragic events at San Bernardino, county officials were in possession of the shooter’s personal information. For some reason, the FBI asked them to change the password on the phone. After the password was changed, it became much harder to hack the phone. (Source: “Everything You Need to Know About Apple vs. the FBI, Explained,” Re/Code, March 4, 2016.)
Then the FBI asked Apple to unlock the phone. When CEO Tim Cook refused, the dispute ended up in court. Months passed, the court ruled in favor of the FBI, but Apple wanted to escalate the case. It gained so much visibility that Congress even held hearings.
In those hearings, the FBI finally admitted it screwed up. A member of the House Judiciary Committee asked the FBI a question and the answer was telling.
“There was a mistake made in the first 24 hours, where the county, at the FBI’s request, made it hard to make the phone back up by [changing the password of] the iCloud account,” FBI Director Comey said in testimony. (Source: “FBI Director Comey Admits ‘Mistake Made’ in Changing Apple Password,” Re/Code, March 1, 2016.)
That admission changes the entire complexion of the case. It means that Apple was right in saying the FBI had another way of getting the information. But none of it really matters because Apple already won in the court of public opinion.
All of Silicon Valley rallied behind Tim Cook. Without knowing it, they re-positioned AAPL stock as the secure mobile platform—the new BlackBerry, but with apps and functionality. Customers saw Apple stand up for their privacy.
In an era where our personal information is constantly under threat, Apple’s appeal to privacy could help separate it from its competitors. All in all, Apple’s brush with the FBI could end up being a very good thing for AAPL stock.