- I accurately predicted last January 12 that Apple’s stock deserved a 90-day price target of $325. The stock posted a record 52-week high of $327.85 on January 27.
- If it were not for the COVID-19 pandemic panic, AAPL would still be trading above $325 today.
- My fearless forecast now is that China’s re-opening of factories and retail stores will eventually compel investors to again rally behind AAPL.
- The COVID-19 problem that threatened the supply-chain/logistics cycle of Apple is no longer valid. Retail stores outside China are closed but online sales of iPhones/iPads/Macs will continue.
- The government-imposed stay-home quarantine edicts in many countries will also boost Apple’s App Store business. COVID-19 is boosting streaming videos and video games.
After their successful management of the COVID-19 epidemic, factories and businesses in China and Japan are recovering. This convinced me that Apple’s (AAPL) stock deserves a 90-day price target of $325. I am highly confident I will repeat my previous successful Apple stock predictions on January 12. On that day, I was accurate with my call that AAPL will deliver $325. Based on the chart below, AAPL posted a historical record price of $327.85.
The weekly chart above also explained that AAPL was among the most-punished stocks during February/March hysteria over COVID-19. Apple’s dependence on Chinese factories to assemble its hardware products was vulnerable to China’s closure of factories in January/February.
It is also understandable that AAPL went as low as $212 last week because other countries did not immediately impose China-like quarantines to promptly check the spread of the COVID-19 epidemic. This new dilemma is forcing more investors to remain pessimistic over AAPL and other stocks. Yes, most components are made in China so there is no longer a threat of a production slow-down for iPhones and other Apple products.
Even though China factories have reopened and iPhone/iPad/Mac production schedules are on track, the general fear now is that strict entry/exit rules on many countries will lead to lower sales for Apple and other physical goods vendors.
Cheap Airplane Leases Can Help Apple Overcome Global Travel Restrictions
This new fear is misplaced. Apple, with its billions of cash in hoarding, can easily charter jet planes and container ships to ferry newly-made iPhones and iPads from China. Airlines are very desperate. Most of them are nearly-bankrupt due to the COVID-19 pandemic. Airline companies are easy to exploit now. Apple can cheaply lease thousands of unused passenger airplanes to quickly supply different countries with newly manufactured iPhones/iPads.
Instead of letting their long-distance Airbus and Boeing jets remain idle, airline companies will welcome any lease offer from Apple. The large carrying capacities of Boeing 777/747 and Airbus A380 jets means each one can transport more than 20k units of $700-$1200 iPhones.
The opportunity to cheaply lease long-distance airplanes is likely why Apple rescinded its two-per-person sales limit on online orders. The Chinese factories are back to full production capacities. Apple has also solved the problem of quarantine-induced travel/transport restrictions.
Checkpoints or quarantine control points will allow cross-country transport of Apple products because they can be easily/cheaply disinfected with 0.5% Chlorine solution. SARS-COV2, the virus that causes COVID-19 illness is vulnerable to cheap disinfectants. Apple only to spend a bit more to have new iPhones come in waterproof packaging. This way they won’t get damaged when sprayed upon with water-based disinfectant.
Topline is More Important Than Bottom Line
During this contagious fear period, Apple has to reassure investors that it is very resilient against pandemics. Having more than $100 billion in cash & short-term investments already makes Apple resilient to any pandemic. However, showing it can maintain a decent quarterly revenue while the world panics over COVID-19 is a surefire way to calm down scared investors. Top line is now more important than the bottom line for any company. Protecting top line while sacrificing margins is the right thing to do right now. It will hurt Apple mighty margins once it builds its own fleet of airplanes, ships, and trucks to protect the delivery of its products.
However, even accounting for Apple leasing its own ships, trucks, containers ships, disinfectants/teams, I still expect it to maintain over 31% gross margin and 19% net income margin. Panicked investors can be calmed if Apple can show resilience in its topline while the world is under the COVID-19 pandemic.
Increased Spending On Streaming Media And Games
I am highly confident that weaker iPhone sales due to COVID-19 can be offset by increased spending on iOS games and subscription services. The stay-home order of governments in many countries will compel more iOS and macOS device owners to play more games and watch more movies/listen to more music. Thanks to COVID-19 quarantines, Apple’s app store could see quarterly gross revenue of $15 to $16 billion in the first half of this year. Apple’s app store was already posting $13.53 billion in average quarterly gross sales last year.
That was before governments are enforcing stay-home total quarantines on billions of people. The affluent owners of iOS devices will be bored they can’t spend their extra money on dine-outs and vacations. Most of them will splurge on in-app purchases.
My fearless forecast is that if Apple can still maintain robust sales during these two first quarters of 2020, institutional investors and hedge fund managers will again boost its stock to above $325. The surge in streaming media entertainment and video games during enforced stay-home quarantines will likely add $2-4 billion in extra quarterly revenue for Apple’s Services segment. This can help offset reduced iPhone/Mac sales due to COVID-19 travel/transport restrictions.
The stock-picking AI of I Know First still touts a bullish one-year market trend forecast for AAPL. We should trust in its confidence that Apple’s stock will trade higher than its current depressed price levels. I repeat, AAPL will breach $325 again within the next 90 days.
Past Success With Apple Stock Prediction
I Know First has been bullish on Apple stock in past predictions. On January 10, 2020, the I Know First algorithm issued bullish predictions for Apple stock price. The algorithm successfully forecasted the movement of the AAPL price. In 30 days, Apple stock price has risen by 3.85% in line with the I Know First algorithm’s forecast. See the chart below.
This bullish Apple stock prediction was sent to the current I Know First subscribers on January 10, 2020.
Here at I Know First, our algorithm has modeled and generated stock forecast that correctly forecasted assets price movement worldwide for short-term and long-term time horizons, ranging from 3 days to a year. Since 2011, we have been providing daily forecasts for forex forecast, gold forecast. Additionally, we provide the latest Apple stock prediction news, updates and the latest launches. Today, we are producing daily forecasts for over 10,500 assets. Lately, we discussed in articles about the Coronavirus stock market, as well as Warren Buffett investment strategy in times like nowadays.
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