‘Risk’ and ‘uncertainty’ were words that were almost forgotten by Apple (AAPL)’s investors and stakeholders as the release of new Apple products kept the analysts giving good reports pertaining to the financial position of the company.
For a long time, #Apple has been in the lead of producing high end laptops, #smartphones, #iPads and other forms of PDA devices for the consumers. Investing in their stocks has been an exciting experience for small, middle and long-term investors. Their numbers and tables have been relaying positive results, amidst uncertainty in a volatile yet energetic school of competing companies, including Samsung. However, with the release of iPhone 5, the reviews are not as interesting as they have always been, making most investors want to sell their stock. The question is, is selling the only way around this problem? Is there a way the shares you own can be useful to you in the long run?
The two arguments below show that despite the fall, the stocks will rise again.
- Apple always beat the odds to rise up again
In a previous article dated February 21, 2012 explaining some indications on Apple shares gaining value, it will be noted that there are some instances that Apple shares defied all odds to rise again after being expected to continue dipping. On February 15, 2012, Apple stock closed at $497.67 below the previous day’s value of $502. The $502 figure was a further decline from the day’s earlier figure of $526.29. Even though analysts argued that the stock would continue to fall, a complete reversal occurred as a week later as on February 22, 2012 the stocks closed at an all-time high value of $513.04. As if the above figures are not enough to go by, a similar situation was to be repeated in the month of July 2012.
On the 25th of the same month, the shares were trading at $580.55 and closed at $574.97, a figure that was way below the moving price. By July 31, the figures had jumped all the way to $610.76. These two are not the only instances where such dramatic rise and drops of Apple shares; there are many others. The point is, despite many indications that the shares would continue falling, the exact opposite happened and they soon gained stability.
The chart below shows some instances (shown by green circles) where the shares closed at a figure well below the moving average of 50 days. The recent case seen on5 October 2012 is also included. It is important to note that in the instances numbered 1, 2 and 3, the shares shot back up after just a few days. The only unique situation happened on3May 2012 (circle 2) where they continued to dip but the effects were totally reversed in about 6 weeks. With these past indications, the shares are still expected to rise and reverse the most recent dip numbered 5.
A chart for stocks in Apple over 6 months, with MA of 50 days– Sourced from: Yahoo Finance
- iPad mini statistics
The revenues earned from iPads in the previous quarter are about $9 billion and this was coming close to 26.27% of the total quarterly revenue of $35 billion. Even though this revenue figure is well below that of iPhone, it has been known to be still substantial as it puts the iPad in the second highest slot of revenue earnings. The very first model dived into the market in the month of April of 2010, and as the graph below shows, there has been growth in sales quarter after quarter ever since the release. The only point where sales dip is when the bulk of Apple consumers opt to wait for the release of a new tablet rather than buy the same model. This happens when there is news of a new market ‘arrival.’
Reports indicate that October 10 2012 is the date that investors will be invited to take part in the iPad’s pre-launch. The main launch event is slated for October 17 this year and the product will most likely be released into the market on November 2. The current stock valuations do not put to consideration the effects that its launch will have on the company’s value as a whole. However, estimates indicate that profits are most likely to hit the $1 billion mark and these are based on a margin of 20% and a projected sale of more than 20 million iPads. The release of IPad Mini may not necessarily beat the sales experienced by the previous iPad 3 but due to its small design, it will most likely be a major competitor against the Amazon’s tablet.
The profit gains that will be associated with the Mini have a possibility of being short-term and limited but the long-term effects may be huge. Quarterly sales for the iPod have reduced to close to 7 million units. However, remember the resurgence of Apple in 2001 was because of iPod sales as it allowed more profits to be reaped from Apple retail, Mac systems and iTunes. More revenue will be obtained from the iPad Mini launch, as it will synergize more with iTunes by boosting book sales. In addition, loyal customers will get access to Apple products that were previously out of reach due to price issues. The simple effect is that even though the mini will not surpass the figures achieved by the iPhone models, it will go a long way in making the Apple ecosystem stable and ready for more products.
The very first model dived into the market in the month of April of 2010, and as the graph below shows, there has been growths in sales quarter after quarter ever since the release. The only points where sales dip is when the bulk of Apple consumers opt to wait for the release of a new tablet rather than buy the same model. This happens when there is news of a new market ‘arrival.’
Increase in sales will guarantee your retirement
However, investors need not worry about the large stock sales by insiders, but if a certain scenario is taken into account, it can make retirement very luxurious. In as much as the iPhone is the backbone of Apple’s revenues, the iPad is fast rising in the ranks when it comes to earning revenue, and this can provide a way out for worried investors. Analysts indicate in the next five years, Apple will grow at a rate of 23% annually and the increasing market share for iPads is slated to increase according to statistics and the launch of iPad Mini. This means that you can opt not to sell any of your stocks but on the other hand, carefully analyzing the company’s performance. With this in mind, we can conclude that holding on to your current shares with the view of your retirement in mind will almost give you enough income to swing on your rocking chair day after day, as the Apple stocks will assure you of constant income, according to the projections.