Where Is Apple Stock Headed?
Apple Inc. (NASDAQ:AAPL) announced on Tuesday that it would start selling its $160.00 “AirPods” on December 21, prompting many analysts to turn bearish on Apple stock (AAPL).
To put it simply: they think Apple’s creativity has run dry.
Why, you ask? Because when Apple unveiled its new “iPhone 7” in September, there was no headphone jack. They had removed the auxiliary port in order to drive consumers toward their other new product: the Airpods, a wireless set of earphones.
Think about that for a moment. Every existing smartphone has a circular slot where you can plug in earphones. It’s an industry standard that keeps all headphone makers on a level playing field. Listening to music is as simple as plug-and-play. But apparently that’s too mundane for Apple.
For no apparent reason, Apple is selling $160.00 wireless earphones that need to be purchased separately from the iPhone 7. On a personal level, I think it’s crazy. But I never let my personal views get in the way of my investment analysis.
Let’s take a look at the numbers…
Apple’s fourth-quarter iPhone sales beat estimates, despite weakness in China. The company still managed to ship 45.51 million iPhones in three months, compared with the 44.8 million that analysts predicted. It was the first time in long while that they topped expectations. (Source: “Apple iPhone 4th-quarter sales beat estimates,” CBC, October 25, 2016.)
Moreover, U.S. mobile operators like T-Mobile US Inc (NYSE:PCS) and AT&T Inc. (NYSE:T) say that iPhone 7 sales are some of the best they’ve ever seen. I struggle to understand why customers want a phone that requires you to purchase extra earphones, but there’s no denying that’s what they want.
Consumer trends are strange, and often escape rhyme or reason. As investors, we need to be sufficiently tuned into what people want, regardless of whether we sympathize with their yearnings. Just go with the numbers, folks. That’s how to make money.
In conclusion: creativity is subjective. It doesn’t matter whether random analysts believe that AAPL stock has lost its spark so long as customers continue to buy iPhones and the related Apple gear. With this in mind, it looks like Apple stock could easily hit $150.00 within the next 18 months.