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Collin Harness


Apple Stock Breakdown

In-depth breakdown of the Apple stock.

    1. Overview

    Apple is a technology company that designs and manufactures smartphones and computers along with other tech products. The business also provides technology services to consumers worldwide.

    Apple is the second largest provider of smartphones in the world.

    It created the tablet market with the iPad and continues to grow its lines of Mac computer products. It has expanded its product lines to include headphones along with the Apple Watch.

    The fastest growing section of the business is Apple services. These services include Apps like Notes, iCloud, Apple App Store, Arcade, Fitness and AppleTV+.

    2. Industry

    Apple was one of the original competitors in the computer hardware space. Creating personal computers along with their own operating system. The continue to compete in this space against Microsoft and computer manufacturers.

    In 2021 Apple sold more than 240 million iPhones worldwide. This is their most popular product and was drives the majority of their revenue. The smartphone marketplace is crowded, but their primary competition is Samsung and Google. They are the leading worldwide providers of smartphones. The smartphone market continues to grow as more developing countries worldwide increase infrastructure and quality of life.

    As more people come online to the internet the need for these products will continue.

    Any company that makes a smartphone is competition.

    Any company that makes computers is competition.

    Any company that provides technology services is competition.

    But apple has really created their own industry. Their products and software are a walled garden. It is difficult to switch your data from Apple platform once you are locked in. Their customers often by more products like an iPad or an Apple watch once they are integrated into the Apple ecosystem.

    Their biggest competition will come from other entertainment businesses. As Apple dives deeper into technology services like AppleTV+ they will be competing with many other entertainment providers.

    3. Ownership

    Vanguard - 7.5% - 1,206,772,307 shares

    Berkshire Hathaway - 5.54% - 890,923,410 shares

    Blackrock - 4.21% - 4.21%676,873,946 shares

    SSgA Funds Management - 3.81% - 613,852,274 shares

    Fidelity - 1.96% - 315,468,452 shares

    Geode Capital Management - 1.69% - 272,081,668 shares

    T. Rowe Price Associates - 1.45% - 233,079,365 shares

    Northern Trust Investments - 1.16% - 186,031,985 shares

    Norges Bank Investment Management - 0.88% - 142,076,403 shares

    BlackRock Investment Management - 0.70% - 111,943,109 shares

    4. Valuation

    $2.7 Trillion

    5. Revenue and net income

    2021 Revenue - $365,817,000,000

    2021 Net Income - $99,633,000,000

    Basic EPS - 5.67

    6. Balance sheet

    Cash and Cash Equivalents - $62,639,000,000

    Total Debt - $124,719,000,000

    7. What can go right

    People continue to buy the iPhone. Macs continue to increase in sales number. Service revenue and customers increases.

    8. What can go wrong

    iPhone sales decline. Services does not catch on with customers. Apple releases a product that customers do not want and it tarnishes the brand.

    9. Verdict

    Apple is a really expensive stock. $2.7Trillion is a high valuation. But the stock market loves this stock. They have a solid product in the iPhones and they continue to reach people around the globe with lower cost phones.

    Tim Cooke has been really good at selectively introducing products into the Apple ecosystem and this has been to their benefits. Make the current products as good as possible and reach as many customers as possible.

    I think the physical Apple Stores gives them an advantage over their competition.

    As more streaming services mature it will be interesting to see what happens to Apple Services. They will need to expand what they are offering within these services. How deep will Apple go into healthcare?

    I think Apple has found a way to consistently grow revenue and will continue to increase the top line over time.

    The stock will continue to consistently grow over time. But I think at this valuation it will be difficult to double or triple your money in the stock. The stock does pay a dividend so you may choose to hold the stock for the cash payments.

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