Apple Inc. - Stocks

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In the last two decades, the companies offering consumer electronic products and services have grown tremendously, and ‘Apple’ is one name that stands out. Apple is a US multinational company and a global leader in designing, developing, and offering the best consumer electronic products such as smartphones, laptop computers, tablets, portable music players, and other digital devices.

Apple was formed by Steve Jobs, Steve Wozniak, and Ronald Wayne in 1976, and today, it is the biggest business company based on market capitalizations. In the last decade, the success and popularity of Apple has grown ten folds, and in August 2018, it became the first Trillion Dollar company in the world. Apple not only designs and sells sophisticated digital devices such as smartphones and laptops, but it also provides online services and inventive software.

Apple is not only a name of trust and superior quality, but the company has always known to set a benchmark in advanced and innovative products. There are more than one and half billion active Apple users on numerous Apple devices.

Apple, along with other global US brands such as Amazon, Facebook, Netflix, and Google, makes ‘FAANG,’ which denotes to largest business companies based on their total market capitalizations and yearly growth. The headquarter of Apple is located in Cupertino, California, the United States, the company has over 137,000 employees and more than 500 stores in almost 25 countries. Of the 510 stores, 271 are located all across the US, while the rest 239 are situated in numerous popular places of the world such as UK, Australia, Italy, France, China, Belgium, Canada, Germany, Japan, Mexico, Macao, Spain, Sweden, Switzerland, and the Netherlands.

History of Apple

Apple was formed on April 1, 1976. The first task of the company was to produce and launch a personal computer named ‘Apple 1’. The firm was integrated as ‘Apple Computer Inc.’ in on January 3, 1977, and Mike Markkula, a millionaire back then investing $250,000 in Apple and Wayne, sold his share to the other members for $800. The ‘Apple II’ computer was also launched on January 3, 1977, and it revolutionized the computing technology by introducing color graphics for the first time.

After doing business for couple of years, Apple recruited professional computer hardware and software designers and launched its production line, which helped its shares to grow quickly. From $775,000 annual sales in September 1977, the business of Apple flourished and reached $118 million in annual sales in September 1980. The growth rate in three years was an astonishing 533%

Apple started trading publicly from December 12, 1980, where almost 4.6 million shares are were priced at $22 per share. Just after the first day of trading, the share price jumped to $29, and market capitalization was $1.778 billion. The Initial Public Offering (IPO) of Apple gathered more than $100 million, which made 300 millionaires in a day.

In 1984, Apple released its Macintosh series, which was the first computer without a programming language. In 1985, the Apple Board of Directors ousted Steve Jobs, who again returned to the company as CEO and revolutionized the company and also brought new technology in the world through his vision and critical thinking. In 1997, Apple was close to bankruptcy, but Jobs had a plan and secured investment worth $150 from Microsoft that included support of Microsoft Office products on Mac Operating Systems. In the new decade of 2000, Apple refined its own Mac OS-X operating system and launched the iPod, iPhone, and iPad, and a total of 10 million devices were sold when 2004 ended. When the first iPhone was launched on June 1, 2017, the share price of Apple increased and touched $122.01.

The stock of Apple has split on four occasions, three times it was 2 for 1 Once on June 16, 1987, second time on June 21, 2000, and third time in February 28, 2005. The fourth split was 7 to 1 on June 9, 2014. On February 12, 2020, the share price of Apple touched $327.20, which was phenomenal for the company’s growth and success.

On January 9, 2007, Apple Computer Inc. was now to be called only Apple Inc., and the focus of the company was to design and develop innovative computer and other various consumer electronic products. 2007, was also the year when Apple, for the first time, introduced its flagship iPhone and Apple TV.

The minor setback for Apple came when CEO Steve Jobs died on October 5, 2011. Steve Jobs was recognized as one of the most influential business leaders and on the day of his death, Apple share price was traded at $54.03. Tim Cook became the CEO and is still working as the head of Apple Inc.

Current Business and Investment of Apple

Apple is currently the largest business company according to revenue earned per year and also the most valuable company due to wide market capitalizations. Apple company designs develop and sell its iconic iPhone, iMac laptops, and iPods, along with innovative watches, wireless earbuds, and tablets. Apple also offers a range of software, services, networking solutions, third-party digital content, and accessories.

The business of Apple is divided into segments, and each segment denotes a particular region such as the Americas, Europe, Japan, Greater China, and Rest of Asia Pacific. The Americas includes both the North and South America.

The Europe segment comprises nearly every European country, along with the Middle East, Africa, and India. Greater China includes China, Hong Kong, and Taiwan. The Rest of Asia Pacific consists of Australia and other Asian countries that are not included in other segments. The products and services of Apple includes

• iPhone
• Mac
• iPad
• iPod
• Apple Watch
• Apple TV
• Apple Air Pods
• Range of software (iPhone OS, Apple Pay, iOS, Apple CarPlay, and iCloud)

Risk and Potential in Apple Business Environment

Apple is one of the most valuable and admired business company in the world, and its business performance, along with consumer products and services, is closely followed by people all across the world. SWOT analysis is a fundamental strategic framework that allows big corporations such as Apple to analyze its current performance and future growth. The SWOT analysis of Apple is given by

• Strengths

Apple is one of the most trusted brands in the IT and technology sector. Apple has a wide range of loyal customers who always prefer and use Apple products amid dozens of competitors. Apple always is distinctive when it comes to innovative products and services. The company has a good distribution network along with a captivating marketing campaign through TV commercials and online ads. The brand name of Apple is synonymous with sophistication and superior quality. Every new product of Apple becomes fan-favorite, which is not seen with any other business company.

• Weaknesses

Apple mostly focuses on the B2C (Business to Consumer) market and not much importance is given to the B3B (business to business) market, as used by some of its competitors such as Dell and HP (Hewlett Packard). Apple also demands high prices for its products, which can be a problem mostly in emerging markets where people like to get products at economical prices. Apple heavily depends on the sales of high-end products and segments.

• Opportunities

Apple can make strategic alliances and partnerships with other innovative technology companies to expand its business and market. Apple can look to enter into a gaming console and compete with Sony PlayStation and Microsoft Xbox. The company could increase its range in online music, video, and overall online content to attract more consumers.

• Threats

Apple faces a tough challenge and competition in nearly all its product lines. Apple has the biggest competition with Android which is Google’s operating system and used in millions of smartphones that people use other than Apple iPhones. Apple also has direct competition in laptops with rival brands such as Dell, HP, Toshiba, Acer, and Microsoft. In smartphones, Apple has to compete with Samsung, Huawei, Google, Sony, Motorola, HTC, Xiaomi, LG, and Nokia. Apple also faces rising labor costs in emerging markets.

Stock Analysis of Apple

Apple is listed and actively trades on the NASDAQ with the ticker symbol ‘AAPL’. The company is listed under the ‘Electronic Technology’ Sector, and the industry is ‘Telecommunication Equipment.’ Apple is also a common member of notable indices that includes NASDAQ 100, Dow Jones Industrial Average, S&P-100 Index, and S&P-500 Index.

Apple shares have witnessed considerable growth over the years and the last decade in particular. During the global financial crisis and recession of 2008 to 2009, the share price was trading at $12 and even below, but moving forward to 10 years, and in 2019, the share price was touching $290 and setting new records. August 2, 2018, was a landmark day for Apple as it became the first company to reach 1 trillion based on market capitalization.

As an investor, you have a few options to trade in Apple, first is buying shares of Apple in the exchanges the shares of Apple are listed, such as NASDAQ. The second option is to trade using Contract for Difference (CFD), which is a derivative contract and allows you to speculate on the price movement from opening to closing of the trade. With CFDs, you have the advantage of speculating the price of underlying assets without the need to own the asset and you also have the option of going Long or Short when making a trade.

Since 2010, the graph of Apple has only gone in an upward direction, and the company broke many of its own records and the launch of every new iPhone broke the record set by the previous iPhone. For the first time in 2019, Apple predicted revenue to be less than $9 billion as compared to the previous year due to dwindling sales in China. However, at the start of 2020, Apple was said to become the first Business Company to reach $2 trillion market capitalization with the share price peaking at $327.85, but the growth was impacted by the Coronavirus pandemic that affected the entire world.

Most of the Apple products are manufactured in factories located in China, and experts believe almost 32% of Apple’s business could be badly affected due to the Covid-19 outbreak. Of the 100% revenue, the company earns 77% from its products and 23% from services. The stock value of Apple mostly depends on the sales of its premium product ‘the iPhone’ along with Apple watch iPad and Mac series.

In the 3rd financial report of 2020, the sales of Apple’s products were down as its worldwide stores were closed due to ongoing Coronavirus outbreak. The iPhone sales fell 7%, Mac 3%, and iPad 10%. The sales of the products may be down, but Apple is covering it by its enormous range of services that includes App Store, Apple TV, Apple News, Apple Music, Cloud Services, Video, and ad business. The entire services sector rose 16% YoY and reached an all-time high of $13.35 billion.

Historical facts and trends have shown that Apple has come out successfully from economic downturns, and in last five times, the share price of Apple has fallen but risen even more and trade at record high values. The cash flow and strong balance sheet help Apple to sustain economic shifts and promise substantial value to the stakeholders in the form of dividends. However, as an investor, you need to analyze the Coronavirus pandemic situation and its economic impact, the growing political tensions between China and the US, the value of the US Dollar, and the upcoming US Elections.

The information above is for education purposes only and cannot be considered as investment advice. Past performance is not reliable indicator of future results.