Apple Stock May Get Its Next Growth Catalyst
Apple Inc. (NASDAQ:AAPL) has been struggling to find its next game-changing product, as the iconic “iPhone” completes a decade of existence. The growth in Apple’s “Services” segment has been a silver lining for the company, and investors are optimistic that this might be good for Apple stock.
However, it will take some time before this segment could take the place of the iPhone. In the meantime, the company is planning to do something which has the potential to boost its services growth in a big way, and this could turn around AAPL stock.
Apple Inc. is planning to build a new business in original television shows and movies, a move that could make it a bigger player in Hollywood and offset the slowing sales of iPhones and “iPads.” (Source: “Apple Sets Its Sights on Hollywood With Plans for Original Content,” The Wall Street Journal, January 12, 2017.)
The programming would be available to subscribers of Apple’s $10.00-a-month streaming-music service. “Apple Music” already includes a limited number of documentary-style segments about musicians, but it is not like the premium programming that Apple is planning now.
Apple has been in talks with veteran producers in recent months about buying rights to scripted television programs. It has also approached experienced marketing executives at studios and networks to discuss hiring them to promote its content. Moreover, executives at Apple have told people in Hollywood that the company hopes to start offering original scripted content by the end of 2017.
This is a strategy that could send Apple stock soaring, as this is exactly what investors have been looking for: a diversified revenue stream and the growth in the Apple Services segment. With the resources that the smartphone maker has at its disposal, it should not be long before the company establishes itself as a serious contender to other media companies.
Getting into original content is one area that holds a lot of promise rather than just being a distributor of media. Given the fact that Apple iPhone sales declined for the first time last year—which spooked investors and hit AAPL stock very hard—it is important for the company to diversify its revenue streams.
As Apple finalizes plans to introduce its own scripted TV series by the end of this year, there will be many challenges in the way. What investors will be focused on is whether the company makes some announcement of buying out established players in the field in order to establish itself as a serious player in the media business. That could really push AAPL stock higher.