AAPL Stock Prediction: 0%-Interest iPhone Installment Plan Is A Tailwind for Apple

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Summary:

  • Apple’s stock is now a buy because it is willing to be more aggressive in marketing its pricey iPhone products.
  • The big decline of iPhone sales in China last year is being addressed through lower price tags and 0% interest installment plans.
  • The interest-free iPhone installment plan is implemented through Ant Financial, a subsidiary of Alibaba.
  • The more iPhones it can sell, the better it is for Apple’s fast-growing Services revenue segment.
  • The predictive algorithm of I Know First has a very bullish 12-month forecast for AAPL. Weekly technical indicators and moving averages hints AAPL is a buy.

Apple (iPhone) has a debilitating headwind in notably weakened iPhone sales in China. Tim Cook blamed China as primary reason why Apple has shortfall in iPhone sales. The holiday quarter earnings report was upsetting because 4Q2018 China iPhone sales went down by -19.9%.  This is depressing because the China market accounts for 18 to 20% of Apple’s revenue. The two charts below explained the severity of Apple’s China problem.

 

Apple’s Q1 2019 (Q4 of 2018) revenue from China iPhone sales plunged to $13.2 billion. This was 36.4% lower than Q1 2018’s $18 billion. The steep dive in China is why Apple’s Q1 posted a -15% Y/Y dip in total iPhone revenue to $52 billion.  It is only judicious therefore for Apple to be more aggressive in marketing iPhones in China.

How Apple Is Addressing The China Difficulty

Tim Cook hinted last month that cheaper iPhones is highly likely this year. It’s a no-brainer for Apple to lower the price tags of its iPhone XS and iPhone XR handsets. Chinese firms like Huawei, Xiaomi, Oppo, and Vivo are offering sub-$500 flagship smartphones. The Xiaomi Mi 9 is less than $500 but it has better camera/video performance and is the fastest smartphone to date.

Xiaomi became no.1  in India. Apple never made it to the top 10 in India for the past five years. This is due to the overpricing of iPhones versus Chinese flagship Android phones. Perhaps after solving the China headwind, Apple will refocus its strategy in India. India now accounts for 10% of global smartphone sales.

While the rest of the world saw a 9.7% decline in smartphone shipments, India posted a 14.5 Y/Y growth last year.

The easiest way for Apple to disrupt the massive sales of Huawei and Xiaomi is for it to lower the price tags of its flagship phones. It is hard to grow sales of $1,000 and $800 iPhones when Xiaomi and Huawei can sell equivalent handsets at less than $500.

The other solution that Apple hopes to reverse the iPhone’s decline in China is zero percent installment plans for new iPhone buyers. This China-exclusive offer is in partnership with Ant Financial – the payments processing firm owned by Alibaba (BABA).

Chinese customers can buy an iPhone XR via installment payments of 271 yuan ($40.71) per month. The monthly installment payment for iPhone XS is 362 yuan ($53.92). The iPhone XR retails for 6,499 yuan ($968) in China. The iPhone XS sells for 8,699 Yuan ($1,295.61).

Other banks in China are also offering the same interest-free iPhone installment plans for Mainland Chinese. This special promo from Apple should help reverse the decline of the iPhone in China. Going forward, Apple can become a top vendor in India if it also offers the same zero-percent installment iPhone plan. Heck, this could be a massive sales booster for global iPhone sales if Apple offers this promotion in all countries.

Why Apple Needs To Sell More iPhones

Cheaper iPhones and 0% interest installment plans are necessary toward selling more iPhones. Apple needs more people using iOS devices to further increase the momentum of its fast-growing Services business segment. The more active users of iPhones, Apple TV, iPads there are, the bigger Apple’s income from iTunes app store sales and subscription payments.

The Services segment is now a $37.2 billion/year catalyst for Apple.

Apple Music and the upcoming paid streaming TV/video service are iOS/macOS exclusives. My takeaway is that Apple can sacrifice its high margins on hardware products because it can recoup this via increased in-app purchases and subscription payments.

Conclusion

Apple lowering its margins on iPhone hardware sales is a strong reason to stay long (or buy more) AAPL. Lower price tags and interest-free iPhone installment plans can boost the sales of iPhones in China and in any country.

My buy rating for AAPL is backed by its bullish one-year predictive market trend forecast from I Know First. AAPL’s market trend score is above 100 (178.42) and I Know First’s predictability score for AAPL is 0.76. I Know First has a great history of correctly predicting 12-month market movements of Apple’s stock.

How to interpret this diagram.

Further, I checked the weekly technical indicators and moving averages. They suggest AAPL as a buy right now.

(Source: Investing.com)

Past I Know First Success with Apple Stock Forecast

I Know First has been bullish on AAPL shares in past forecasts. On September 8, 2017, the I Know First algorithm issued a bullish 1 year forecast for AAPL with a signal of 165.93 and a predictability of 0.61, the algorithm successfully forecasted the movement of the AAPL share.  After a year, AAPL shares rose by 37.23% in line with the I Know First algorithm’s forecast. See chart below.

This bullish forecast for AAPL was sent to I Know First subscribers on September 8, 2017.

To subscribe today click here.

 

Please note-for trading decisions use the most recent forecast.

Apple Stock Prediction: Why Apple Will Release A New Mac Mini This Year

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

 Summary:

  • In spite of year-over-year declines in quarterly revenue and net income, Apple’s stock still jumped 5% during after-hours trading after its Jan. 29 ER.
  • iPhone’s quarterly revenue was down -15% Y/Y but Mac’s revenue was up 9% Y/Y. Revenue from iPad was up +17% and Services was up +19% Y/Y.
  • The strong sales growth of the iPad and Services segments convinced me that Apple will really release a new low-cost iPad Mini and iPad 9.7 inch this year.
  • Office productivity, mobile gaming, and watching streaming movies is still better on an iPad than on an iPhone.
  • Adobe will release an iPad/iOS native version of Photoshop CC this year. A $200 iPad Mini 5 with 7.9-inch screen is perfect for professional photo editing.

I was proven correct when I said that Apple (AAPL) will release a new Mac Mini in 2018. Last year’s release of an updated/improved Mac Mini helped the Mac segment deliver a +9% year-over-year (Y/Y) increase in quarterly revenue. Based on the holiday quarter earnings report of Apple, Mac segment earned $7.4 billion in Q1 2019.  Creative professionals like me love the Mac Mini because it is better than a MacBook (overheats during prolonged use) for graphic design/video editing/content creation.

Services Q1’ revenue was up 19% Y/Y ($10.9 billion), and iPad also delivered +17% Y/Y growth ($6.7 billion). This outstanding performance by the three segments of Apple definitely helped boost AAPL’s price by as much as 5.23% during the January 29 after-hours trading, post-ER.

[su_lightbox type=”image” src=”https://iknowfirst.com/wp-content/uploads/2019/01/AAPL_YahooFinanceChart-1.png”][su_tooltip style=”bootstrap” position=”west” rounded=”yes” content=”Click to enlarge”][/su_tooltip][/su_lightbox]

(Source: Yahoo)

China trouble was largely responsible for the big -15% Y/Y drop in quarterly iPhone revenue ($52 billion). Apple only managed to rake in $13.2 billion from iPhone sales in China in Q1 2019. This is almost $5 billion lower than what it made in Q1 2018 China iPhone sales.

The upbeat reaction during the post-ER after hours trading for AAPL convinced me that investors now better appreciate the non-iPhone revenue streams of Apple. The iPhone is tanking but the other segments – Wearables, Mac, iPad, and Services are all growing.

Please study the official chart below released by Apple for its Q1 2019 earnings report.

(Source: Apple)

The growing revenue streams from the iPad and Services segments convinced me that Apple will really release a new affordable (maybe $200) iPad Mini this year. The release of a $29/$329 9.7-inch iPad last year was responsible for the boost in quarterly iPad revenue.

Apple, The Entertainment Company, Needs The Mac Mini

Common sense tells me that mobile gaming and watching streaming movies and TV shows is still better on the iPad Mini’s larger screen display (than on the iPhone XS/iPhone XR). The larger size of the iPad Mini makes it also better in heat management than on an iPhone. The iPhone XR noticeably overheats when used during prolonged mobile gaming and movie watching.

The iPad Mini is vital to the future of Apple as a gaming and entertainment services provider company. Learned investors should now forget Apple as the iPhone company. Apple is now a leading video games and entertainment company.

A $200 7-9-inch iPad Mini 5 with Apple’s older A10x Fusion processor will make it the best mobile gaming device. Even the even older A10 Fusion processor is already a decent gaming System on Chip (SoC). The graphics performance of the A10 Fusion processor is better than the high-end mobile SoC Tegra K1 from Nvidia (NVDA).

(Source: Notebookcheck.net)

Due to the usually-affluent category of iPad/iPhone owners, Apple is the largest beneficiary of the $61.3 billion/year mobile games industry. The Services segment’s quarterly revenue of $10.875 billion is largely due to Apple iTunes’ 30% cut from money spent by iOS gamers. However, Apple’s video streaming service will soon grow to be a decent contributor to the company’s topline.

I reiterate that an iPad Mini is the best iOS gaming device that can help Apple increase its 30% cut revenue stream from the world’s top-grossing free-to-play (freemium with in-app purchases) mobile games. Unlike Google (GOOG) Apple is enjoying a 30% cut from the estimated $70 million monthly gross revenue of Fortnite iOS. Apple do not allow app/game developers to use its iOS platform outside its iTunes platform.

(Source: SuperData Research)

Conclusion

The iPad and the iPad Mini is important to the fast-growing Services segment of Apple. The iPad Mini;s affordability will also help boost the growing iPad segment revenue. Apple is now a video games and music/video entertainment company. Two years from now, the combined annual revenue from the other business segments of Apple may overshadow iPhone sales. An Apple less reliant on iPhone revenue becomes a much better long-term investment.

I rate AAPL as a buy. I Know First’s stock-picking AI algorithm has a bullish one-year market trend forecast for Apple’s stock.

Apple still trades well below the average 12-month PT of $183.98 made by TipRanks-tracked professional analysts. Going long on AAPL might prove very rewarding after a one-year period.

(Source: TipRanks)

Past I Know First Success Forecast

The following forecast refers to a previous successful I Know First algorithm prediction that gave a bullish long term outlook for AAPL which was included in a premium article on how the trillion dollar app economy is boosting Apple. The prediction was bearish in the short term, but saw a positive upside over the 1 year time horizon with a signal of 116.66 and a predictability indicator of .62. The Algorithm correctly predicted Apple’s share trend. 

To subscribe today click here.

Please note-for trading decisions use the most recent forecast. 

Apple ‘Thinks Differently’ to Lower Property Taxes

Apple ‘Thinks Differently’ to Lower Property Taxes

“Creativity is just connecting things”

-Steve Jobs

(Source: Wikimedia)

You don’t get to be a trillion dollar company by playing completely by the rules. Just as Steve Jobs wanted to “think differently”, it appears as if Apple’s accountants are following suit. Apple has their Apple Park located in Santa Clara County and they believe they have paid their fair share of taxes.

Now, Apple is making the bold claim that a “cluster of properties” they own is worth only $200. Here’s the thing, Santa Clara County’s tax assessor valued the properties at a whopping $1 billion. According to the assessor’s offices, Apple currently has 489 open cases to dispute in a total property value of $8.5 billion. Currently, the company is paying $56 million in taxes, a number they feel unfair.

This isn’t the first time that Apple got creative with taxes. Last year, the company was forced to pay $15.4 billion of taxes back to Ireland after they utilized tax loopholes. In 2014, Apple was just paying a mere 0.005% of sales to taxes, an issue the EU Commission had a problem with.

Apple’s stock has been up this past week as trade tension with China is believed to be coming to an end.

I Know First Algorithm is still bullish for AAPL.

In a Rare Move, Apple Admits to Faulty MacBook Keyboard

“Design is not just what it looks like and feels like. Design is how it works.” – Steve Jobs

(Source: Pixabay)

In 2015, Apple ditched their classic keyboard design for a new, sleeker keyboard with a “butterfly” mechanism for their MacBook and MacBook Pro line. Apple claimed this new keyboard was 40% thinner, making it much easier and fluid to type.

Consumers started reporting that the keyboard was faulty and that just a tiny bit of dust caused the keyboard to repeat letters or not respond properly. Being that these devices started at $1,299, users were mad that Apple was not making an effort to address such a fault. Three years and three lawsuits later, Apple has finally stated that they will fix the faulty butterfly keyboard, free of charge.

In other news, analyst Eric Ross of Cascend Securities stated that, iPhone’s supply chain was “healthy and growing again”. This may be due to the restocking of the iPhone X, which is selling better than expected, causing suppliers to revamp selected parts for the device. Morgan Stanley analyst Katy Huberty stated that the upcoming iPhone will be at cheaper cost as Apple looks to drop prices by 2%. So, this increase in supply may be for the new iPhone, releasing this September, which the company expects to sell greater quantities than last year.  

Apple’s stock was down .64% on Friday as an escalated fear of a trade war mounted a dip in the market.

(Source: Yahoo Finance)

Apple – Creating a healthier planet through innovation

“We’re committed to leaving the world better than we found it. After years of hard work, we’re proud to have reached this significant milestone,”

-said Tim Cook, Apple’s CEO.

Highlights

  • Nine More Apple suppliers commit to 100 percent clean energy production
  • Apple’s renewable energy projects
  • Appel’s New Robot, Daisy, Disassembles iPhone to Reclaim Precious Materials
  • 2018 Q1 results and Q2 outlook

[Image Source: Pixabay]

As part of its commitment to combat climate change and create a healthier environment, Apple announced on April 9, 2018 its global facilities are powered with 100 percent clean energy. This achievement includes retail stores, offices, data centers and co-located facilities in 43 countries – including the United States, the United Kingdom, China and India. The company also announced nine additional manufacturing partners have committed to power all of their Apple production with 100 percent clean energy, bringing the total number of supplier commitments to 23. In addition, over 85 suppliers have registered for Apple’s Clean Energy Portal, an online platform that Apple developed to help suppliers identify commercially viable renewable energy solutions in regions around the world.

Apple and its partners are building new renewable energy projects around the world, improving the energy options for local communities, states and even entire countries. Apple creates or develops, with utilities, new regional renewable energy projects that would not otherwise exist. These projects represent a diverse range of energy sources, including solar arrays and wind farms as well as emerging technologies like biogas fuel cells, micro-hydro generation systems and energy storage technologies.

A few of Apple’s renewable energy projects:

  • Apple Park, Apple’s new headquarters in Cupertino, is now the largest LEED ( Leadership in Energy and Environmental Design) Platinum-certified office building in North America. It is powered by 100 percent renewable energy from multiple sources, including a 17-megawatt onsite rooftop solar installation and four megawatts of biogas fuel cells, and controlled by a microgrid with battery storage. It also gives clean energy back to the public grid during periods of low occupancy.
  • In Prineville, Oregon, the company signed a 200-megawatt power purchase agreement for an Oregon wind farm, the Montague Wind Power Project, set to come online by the end of 2019.
  • In Japan, Apple is partnering with local solar company Daini Denryoku to install over 300 rooftop solar systems that will generate 18,000 megawatt-hours of clean energy every year, enough to power more than 3,000 Japanese homes.
  • Apple is currently constructing two new data centres in Denmark that will run on 100 percent renewable energy from day one.

Appel’s New Robot “Daisy

As part of its ongoing recycling effort, Apple announced on April 19, 2018 that it debuted Daisy, their newest robot that can more efficiently disassemble iPhone to recover valuable materials. Created through years of R&D, Daisy incorporates revolutionary technology based on Apple’s learnings from its first disassembly robot, Liam, launched in 2016. Daisy is made from some of Liam’s parts and is capable of disassembling nine versions of iPhone and sorting their high-quality components for recycling. Daisy can take apart up to 200 iPhone devices per hour, removing and sorting components, so that Apple can recover materials that traditional recyclers can’t and at a higher quality.

Apple “GiveBack”

Apple’s recycling program where people can trade in their device for a store credit. If the device is not eligible for credit Apple will recycle it for free. No matter the model or condition, Apple will turn it into something good for the customer and good for the planet.

Both Apple “GiveBack” and Daisy support Apple’s commitment to create a healthier planet through innovation and help the company move a step closer to its goal of making its products using only recycled or renewable materials.

[Image Source: Pixabay]

Apple announced on February 1, 2018 financial results for its fiscal 2018 first quarter. The Company posted quarterly revenue of $88.3 billion, a 13% increase from the year-ago quarter and an all-time record, and quarterly earnings per diluted share of $3.89, up 16%, also an all-time record.

International sales accounted for 65% of the quarter’s revenue.

“We’re thrilled to report the biggest quarter in Apple’s history…” said Tim Cook, Apple’s CEO.

Apple’s outlook for its fiscal 2018 second quarter:

  • revenue between $60 billion and $62 billion
  • gross margin between 38% and 38.5%
  • operating expenses between $7.6 billion and $7.7 billion
  • other income/(expense) of $300 million
  • tax rate of approximately 15%

Although Apple’s first quarter revenue for 2018 is based on the recent iPhone X release I believe that their revenue growth and stock growth will continue and increase in 2018 on the scent of Apple’s environment commitment. Following Apple’s environment progress report of the past year and the beginning of 2018 one can see that they invested many resources in R&D with the aim to create a healthier planet through innovation.

The report shows how perhaps the Energy Use and Emissions at Apple’s Colocation Facilities may have increased in the past years. Percent Renewable Energy started at 0% in 2011 and got to 99% in 2017. The growth between the years of 2014 to 2017 was 18% (from 81% to 99%) and I assume that by the end of 2018 Apple will reach 100%. By achieving 100% of Renewable Energy Apple will inflame an environment revolution.

In accordance with Apple’s new robot “Daisy” that was announced on April 19, 2018 there were a few more highlights at that time that may affect Apple stock for the following year. Project Marzipan is Apple’s in-development solution to allow macOS computers to run iOS apps and make its Mac computers more attractive and useful. As a result, I believe that more college/high school  administrators will consider buying the macOS computers again if they can run iOS apps. Future sales could improve after Project Marzipan is finally implemented this year. The Mac business accounts for 7.81% of Apple’s quarterly revenue which could rise and help Apple with further weaknesses in iPhone/iPad sales. My bullish stance on AAPL in long term resonates with this bullish I Know First long term  forecast  for AAPL.

Past I Know First forecast success with Apple

I Know First has made accurate prediction on Apple on September 8, 2017

AAPL is with 14% gain since this bullish forecast.

This bullish forecast for AAPL sent to the current I Know First subscribers on September 8, 2017 

I Know First Algorithm Heat-map Explanation

This indicator represents the predicted movement direction/trend. The signal strength indicates how much the current price deviates from what the system considers a balance or “fair” price.

The signal strength is the absolute value of the current prediction of the system. The signal can have a positive (increase), or negative (drop) sign. The heat map is arranged according to the signal strength with strongest up signals at the top. The table colors are indicative of the signal. Green indicates to the positive signal and red indicates a negative signal. A deeper color means a stronger signal and a lighter color equals a weaker signal. The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability measures the importance of the signal. The predictability is the historical relationship between the prediction and the actual market movement for that particular market. For each asset this indicator is recalculated daily. Theoretically the predictability ranges from minus one to plus one. The higher this number is the more predictable the particular asset is. In comparison to different time ranges, predictability will be higher for longer time. This means that longer-range signals are more accurate.

Predictability is a unique indicator of the I Know First algorithm which allows users to focus on the most predictable assets according to the algorithm. One should focus on predictability levels significantly above 0 in order to trust the signal, when ranging between -1 and 1.

Apple Forecast: 1.87% Return In 7 Days

Apple Forecast

This Best Tech Stocks forecast is designed for investors and analysts who need predictions of the best performing stocks for the whole Technology Industry. It includes 20 stocks with bullish and bearish signals and indicates the best tech stocks to buy:

  • Top 10 tech stocks for the long position
  • Top 10 tech stocks for the short position

Package Name: Tech Stocks
Recommended Positions: Long
24 07 2013 10 48 51 Best Investments Based on Algorithms: 8.19% Gain in 14 DaysForecast Length: 7 days (12/14/13 – 12/21/14)
I Know First Average: 4.44%
Get the “Top Tech Stocks” Package.

Tech (December 21th)

 

 

 

Algorithmic traders utilize these daily forecasts by the I Know First market prediction system as a tool to enhance portfolio performance, verify their own analysis and act on market opportunities faster. This forecast was sent to current I Know First algorithmic traders.

How to interpret this diagram:

Algorithmic Stock Forecast: The table on the left is the stock forecast produced by I Know First’s algorithm. Each day, subscribers receive forecasts for six different time horizons. The top ten stocks in the 1-month forecast may be different than those in the 1-year forecast. In the included table, only the relevant tickers have been included. A green box represents a positive forecast, while a red represents a negative forecast. The boxes are then arranged according to their respective signal and predictability values (see below for detailed definitions).

Forecast Performance:The table on the right compares the actual stock performance with I Know First’s prediction. The column titled “Forecast” shows which direction the algorithm predicted, and the column “% Change” shows the actual stock performance over the indicated time period. The “Accuracy” column shows a “√” if the algorithm correctly predicted the direction of the stock or an “x” if the forecast was incorrect. The I Know First Average is the equal-weights average percent change of the stocks listed below, and the S&P 500 may be included for reference if relevant.

Signal: This indicator represents the predicted movement direction/trend; not a percentage or specific target price. The signal strength indicates how much the current price deviates from what the system considers an equilibrium or “fair” price.

Predictability: This value is obtained by calculating the correlation between the current prediction and the actual asset movement for each discrete time period. The algorithm then averages the results of all the prediction points, while giving more weight to recent performance. As the machine keeps learning, the values of P generally increase.

The Algorithm: The system is a predictive algorithm that is based on Artificial Intelligence (AI), Machine Learning (ML), and incorporating elements of Artificial Neural Networks and Genetic Algorithms. The system’s predictive analytics are self-updating, and thus live. The algorithm is a powerful resource for any investor conducting black-box trading or algotrading. 

Please note-for trading decisions use the most recent forecast. Get today’s forecast and Top stock picks.

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