How long can cook’s “loss sale” last?

After the U.S. stock market opened on August 19, Apple’s share price rose sharply, reaching 468.65 U.S. dollars per share, with a maximum increase of nearly 1.38%. Its market value exceeded 2 trillion US dollars, surpassing Amazon and Microsoft with a market value of 1.65 trillion US dollars and Microsoft with a market value of 1.59 trillion US dollars.

previously, wedbush securities analyst Dan Ives said that due to the delayed release of the iPhone 12, the time when Apple’s market value exceeded 2 trillion might be postponed to the end of the year. Now it seems that the delayed iPhone 12 doesn’t matter to apple. Apple’s outstanding performance is the key to attracting investors.

the fact that Apple’s share price can set such a brilliant record is closely related to the company’s unexpected performance in the third quarter. Even if the “black swan” wings shrouded, apple still has a very good performance.

according to the Q3 financial report of 2020 released by apple, its total revenue reached 59.685 billion US dollars, an increase of 11% compared with the same period of last year and 2.3% higher than that of Q2; the net profit was 112.53 US dollars, an increase of 12% over the same period of last year. Both have greatly exceeded the expectations of many Wall Street investment banks.

among them, iPhone sales are still the biggest contributor to Apple’s revenue growth, accounting for 44.25% of Apple’s total revenue, contributing $26.418 billion to Apple’s revenue.

even affected by factors such as shrinking smartphone market caused by the epidemic, iPhone continues to lead the global smartphone sales. According to the smartphone sales list released by counterpoint research, iPhone accounts for 25% of the U.S. market share, 27% of the UK market share, and 39% of the Japanese market share.

some analysts said that apple is taking the prosperous mobile phone business as the cornerstone to further improve its level in other ecological products and Internet service business. This is also reflected in its Q3 financial report. For example, the revenue of MAC and iPad has increased significantly compared with the same period of last year: Mac’s revenue reached 7.1 billion US dollars, an increase of 22%; iPad’s revenue realized revenue of 6.6 billion US dollars, an increase of 32%.
in addition, the water business of
also increased. According to the financial report, the revenue of wearable business including apple watch and airpods reached 6.45 billion US dollars, accounting for 10% of the total revenue, an increase of 16.7% compared with the same period last year.

in terms of service business, the revenue of Apple Q3 reached US $13.1 billion, accounting for 22% of the total revenue, an increase of 14% over the same period last year. Judging from the recent situation, the growth rate of Apple’s service industry in Q3 may not be separated from the widely criticized “Apple tax”. Some time ago, the developer epic also “fired fire” on apple because of this, saying that its app store’s 30% draw is too high.

apple is amazing not only for its record market value, but also for the speed with which it can accomplish this “task.”. On August 2, 2018, Apple’s market value broke through the $1 trillion mark for the first time, which means that Apple’s market value soared from $1 trillion to $2 trillion, only two years later.

two years are enough to determine the life and death of an enterprise, and Apple’s journey in these two years has not been smooth. In 2018, Apple’s revenue showed a rare negative growth. According to the financial report of that year, in Q4 of 2018 and Q1 of 2019, its revenue fell by 4.5% and 5.1% year-on-year. In addition, Apple’s net profit also began to decline for four consecutive quarters. From Q4 in 2018 to Q3 in 2019, Apple’s net profit fell by 0.5%, 16.4%, 12.8% and 3.1% respectively year-on-year.

according to the financial report data released that year, the biggest impact on Apple’s revenue is undoubtedly its sales in Greater China. According to the Q1 financial report in 2019, Apple’s revenue in Greater China is only $13.169 billion, down 27% year-on-year.

cook is undoubtedly most worried about Apple’s Waterloo in the Chinese market. According to the characteristics of mobile phone purchase of Chinese users, Apple has begun a “big sale” to save iPhone sales. The price of the iPhone dropped to RMB 398 / 99 and RMB 398 / 800 in 2019, respectively. On April 1 of the same year, the price of the whole series of iPhones was lowered again, ranging from 300 to 500 yuan.

after all, cook’s big loss sale has achieved results. According to the Q4 financial report in 2019, the year-on-year growth rate of Apple’s revenue and net profit turns positive, which are 8.9% and 11.4% respectively. However, Apple’s problems in the Chinese market have not been effectively solved, but there is a growing trend.

according to the sales list of counterpoint research, although the iPhone 11 has become a hot selling model in China’s smartphone market, the market share of Huawei mate 305g and glory 9x accounts for 5%, which is higher than Apple’s market share.

Moreover, as sales of low-cost iPhones continue to rise, the revenue generated by Apple’s iPhone business is falling. The 44% share of Q3’s earnings report is still brilliant, but it is the first time for apple that the iPhone’s revenue share is less than 50%.

in addition, recent U.S. government policies also threaten Apple’s future in China. Guo Mingji, an analyst at Tianfeng international, warned that if President trump is determined to completely ban Apple’s business with wechat, Apple may be forced to remove wechat from the global app store, which will greatly affect Apple’s sales in China.

although Apple’s future is still unknown, this does not prevent investors from optimistic about Apple. In recent years, Berkshire Hathaway, the “God of stocks”, has frequently increased its holdings of Apple shares. Now, the market value of its apple stock has exceeded 100 billion US dollars, becoming the largest heavy position stock of Berkshire Hathaway company.

“I think apple is no longer just a stock, but Berkshire Hathaway’s third largest business after insurance and rail.” In an interview, Buffett expressed his views on apple. He also said he would continue to hold more shares in apple in the future.

bill Brewster, an investment analyst with sullimar capital group who has been tracking Berkshire Hathaway for a long time, said that Mr. Buffett’s main focus was on Apple’s strong profitability. “Apple’s performance has improved significantly even during the epidemic.”

in the Q2 financial report of 2020, apple confirmed this point. In the first half of the year when the epidemic became more and more serious, Apple’s net profit only dropped by 2.7% to US $11.249 billion.

in addition to its excellent performance, another reason why Apple is popular with investors is its generous feedback plan. Apple has been steadily increasing its dividend every year since it began paying dividends in 2012. In May this year, Apple announced its eighth dividend increase, an increase of 6%.

in addition, Apple has recently announced that it will split its shares later this month. Although this will not have any impact on shareholders, it will undoubtedly attract more retail investors to buy Apple shares.

some industry analysts said that Apple might become a “safe haven” for US stocks in the future. “Apple has a huge user base around the world, which can generate strong and sustainable revenue. With the continuous growth of 5g and wearable devices business, Apple’s market value is likely to exceed $2.5 trillion in a few years.” Continue ReadingASMC, a lithography maker, was one of TSMC’s 14 top suppliers last year