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Apple on track to become $2trillion company by December 2020?

edited 30 November -1 at 12:00AM in Savings & Investments
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  • MaxiRobriguezMaxiRobriguez Forumite
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    How does low margins and fickled customers put you in a good position when the next crisis happens.

    Was meant to be high prices, not high margins. Whoops. Will edit!
  • NotclosemindedNotcloseminded Forumite
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    That's not what's happening in reality. Middle and lower income have seen a real terms pay cut since the financial crisis as pay lags inflation. Consumer debt growth took over the steering wheel but peaked in 2018 and has been withdrawing since.

    The continued combination of those phenomena will result in fewer people in the middle/lower brackets spending large sums on expensive Apple tech. The middle/lower earners make up the vast bulk of the population.

    As others have mentioned, Apple iPhone sales have been flat for three years, and most of the past three years have involved positive media coverage of the economy and general consumer confidence.

    Again, not saying Apple cannot continue to grow sales and no doubting they've been an excellent business, but the OP was talking about an investment in Apple, and an investment requires assessing not just the capability of the business but it's price and wider socioeconomic risk. Apple is a high risk investment in my opinion as it has a much greater capability for large swings in either direction. People shouldn't think of it as a 45 degree angle stock.

    As a tech category matures the reason to upgrade every year becomes less relevant and only the die hard tech fans will buy every year. Apple know this and this is why few years back they stopped reporting iPhone sales because they know the market as matured. The iPhone 8 at £479 is an excellent phone which will perform for years to come. This is far from being expensive and out of reach of people.

    I can easily see Apple doing more bundling options just like amazon does with prime. It would not surprise me that the iPhone becomes part of an overall bundle package that you pay Apple a monthly fee for x,y,z.
  • NotclosemindedNotcloseminded Forumite
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    sebtomato wrote: »
    Share price will go up if the company value is perceived to be worth more.

    On the basis that the iPhone is the main source of profits for Apple, it's under severe competition (only starting), and they are going to have to cut its price (and therefore decrease their profits on each unit) as they have already started (not many people apart from hard-core fans are willing to pay £1,000 for a logo anymore), then company valuation only has one way to go...unless they find a new product category soon to carry over the growth (and the iPhone was a one-off opportunity).

    People thought they were investing in electric cars, but they apparently let most of their team go. Tim Cook is an accountant, not a visionary. He has managed to milk as much as possible from the iPhone (well done), and the Apple loyalty/brand but not sure/clear what the next move now... Head of design has left too.

    They have just started Apple TV, which has basically one head show (Morning Show), which they paid $30M per episode for. A desperate late move and ridiculous amount of money for a TV series only visible to a very small audience, and an indication they have no clue on what to do with their massive pile of cash. So they might as well continue their share buybacks, which is an indication of lack of insights for other investments.

    Based on the logic above, the company is not going to be valued twice as much anytime soon, and should start declining....

    Why do you continue to ignore the Apple Watch and the AirPods?
  • sebtomatosebtomato Forumite
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    Why do you continue to ignore the Apple Watch and the AirPods?
    Because neither are going to significantly increase the future valuation of Apple, and surely not double its valuation (as per the main point of this thread). They won't either cover for the loss of revenue and profits from the iPhone decline.

    They are quite negligible accessories...
  • NotclosemindedNotcloseminded Forumite
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    sebtomato wrote: »
    Because neither are going to significantly increase the future valuation of Apple, and surely not double its valuation (as per the main point of this thread). They won't either cover for the loss of revenue and profits from the iPhone decline.

    They are quite negligible accessories...

    Look fair is fair if you feel that they won't double in valuation in a year because the stock market is never that easy thing to gauge. If it was then everyone would be in the stock market and rich beyond their dreams.

    However you stating that their valuation only as one way to go if they don't find a new product category is worthless as again for the umpteenth time that argument as been made over and over for 10 years. They do create new product categories when you have said
    Unless they come up with unique products or innovations soon (new product category, which Tim Cook, basically an accountant, has failed to do)

    To also say that Tim Cook has milked the iPhone and is just an accountant makes it sound more like you don't like the guy personally rather than any rational understanding of how the business works or how tech evolves.
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  • PrismPrism Forumite
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    Your last point makes so much sense to me. I would rather have a company which has large margins and loyalty from customers so I could absorb or ride out a crisis. How does low margins and fickled customers put you in a good position when the next crisis happens.

    The only thing that concerns me is how much Apple could be exposed to the geopolitics of China/USA not having large margins and customer loyalty.

    Although I like Apple products, I would rather invest in a company that doesn't solely rely on consumers and especially one where its main product is considered a luxury purchase. Every company is effected by recession but some much more than others. Will Apple grow to be a $2 trillion company in the next few years? That will largely depend on the overall economy - it could halve before it doubles. I prefer to keep my investments in theoretically 'safer' companies with a wider spread of income
  • NotclosemindedNotcloseminded Forumite
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    Prism wrote: »
    Although I like Apple products, I would rather invest in a company that doesn't solely rely on consumers and especially one where its main product is considered a luxury purchase. Every company is effected by recession but some much more than others. Will Apple grow to be a $2 trillion company in the next few years? That will largely depend on the overall economy - it could halve before it doubles. I prefer to keep my investments in theoretically 'safer' companies with a wider spread of income

    Oh don't get me wrong you invest your money where u feel the risk and return is acceptable to oneself.

    Sometimes what we decide is too much of a risk for ourself is someone else's gain and vice versa.
  • PrismPrism Forumite
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    Apple somehow needs to encourage someone like me to use its services because as it stands they make very little money from me even though in our house there are 3 iPhones, 2 Apple Watches and an iPad. However I don't feel we can use any of their services and they are simply not connected enough. Considering that the iPhone is primarily a communication device we don't really use any Apple services to communicate. Its all Facebook, Messenger, WhatsApp, Snapchat, Instagram and Discord. We don't use Apple for media either as it just doesn't work everywhere (including the TV natively) and the content isn't good enough.
    Apple may come out with a full VR enabled set of kit but I feel Facebook have got a large head start here. It also doesn't look like they will be driving our future cars either.
  • BrowntoaBrowntoa Forumite, Board Guide
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    They seem to have their eye off the ball again

    No 5G iPhone until late this year at the earliest , almost all their rivals have 5g models and are currently grabbing that market share from Apple on 24 - 36 month contracts that I suspect they will find hard to grab back those lost customers.

    Their days of innovation seem to be over unless they are successfully hiding development
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  • NotclosemindedNotcloseminded Forumite
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    Prism wrote: »
    Apple somehow needs to encourage someone like me to use its services because as it stands they make very little money from me even though in our house there are 3 iPhones, 2 Apple Watches and an iPad. However I don't feel we can use any of their services and they are simply not connected enough. Considering that the iPhone is primarily a communication device we don't really use any Apple services to communicate. Its all Facebook, Messenger, WhatsApp, Snapchat, Instagram and Discord. We don't use Apple for media either as it just doesn't work everywhere (including the TV natively) and the content isn't good enough.
    Apple may come out with a full VR enabled set of kit but I feel Facebook have got a large head start here. It also doesn't look like they will be driving our future cars either.

    That’s the beauty of competition is that we all have choice.

    No one company can own 100% of the market but what a company must do is ensure they have a clear vision of what they stand for and execute on their plans to ensure they give the majority of their customers what they want and make a profit to ensure longevity.

    It’s not a requirement that a company must make a product that fits everyone’s desires and needs for that company to be successful.
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