“Apple release could see investors shift perspective away from products & towards drivers in stock buy-backs and looming trade war” Joshua Owen, Trader at ayondo markets

“Apple is set to report earnings after the bell in a season that’s led to mixed reading for Big-Tech investors. The world’s most valuable company will be looking to justify its position as the frontrunner to reach the $1tn mark on the back of its products, services and of course its stock buyback strategy. With any Apple release, iPhone sales are always going to be front and centre and the pivotal contributor to the estimated 15% year-on-year revenue growth. Previous scepticism on the iPhone X price-point was proved to be misplaced with consumers lapping up the $1,000 handset, so investors should look at an increase in the average iPhone price to boost the stock ($606 last year).

“Furthermore, any clues on future iPhone releases are going to be hotly anticipated by Apple-watchers as we approach their typical product release season, though perhaps equally as anticipated will be any signs of progressing diversification from an over-reliance on handsets. Indeed, Apple has stated it wants its Services division to be a $50Bn company in the coming years and investors will have to gauge whether this arm can realistically pick-up the slack in any fall in hardware sales. Products and services namely AirPods, Apple Music, App Store and Apple TV continue to compete in heavily saturated spaces so investors will have to ask themselves whether Apple can innovate and lead these spaces as they did with the iPhone over 10 years ago.

“From a more long term view, perhaps this release, more than any other, will see investors shift their perspective away from products and more towards two other drivers in stock buy-backs and a looming trade war. As a company with a supply-chain so heavily exposed to China, any tariffs imposed on the region will inevitably hit the stock price hence investors must take any potential action into their considerations in valuing this company. On the other hand, Apple’s cash pile and Tim Cook’s desire to become cash neutral business could see a pick-up in stock price should the timeframe of this strategy be met favourably.”