Apple Stock Forecast: AAPL May Be Headed Towards Another Record Quarter

Apple Stock Forecast: High Demand For XS Max, XR On The Way

(By Rhaym tech Via Wikimedia Commons)

With the release of the new iPhone XS and the more popular XS Max, Apple may be on the verge of it’s highest grossing iPhone release yet. Not to mention being days away from the release of the highly anticipated, and more affordable iPhone XR. In a recent survey by Piper Jaffray, from 700 domestic Apple iPhone owners, 39% would upgrade to the iPhone XS or XS Max if they were to upgrade this year with just about a split between the two models. The remaining 61% would choose the upcoming iPhone XR or existing iPhone 7 or 8.

Given that “older” apple products seem to not really survive that long. Wether that is by Apple’s own controversial, yet somehow forgivable doing, or people’s desire to have the next best thing, people are buying the newest phones. The in-house built A12 Bionic chip powered phone will cost the customer upwards 1000$, not to mention the increased warranties. People are now willing to pay top dollar for something that is highly utilized on a daily basis, and the reflection of the premium quality cellular phones will be seen in their sales. I believe that Apple’s business strategies are far more complex and exceed that which meet’s the eye. The release of the iPhone XR, which is a more affordable alternative to the only slightly more premium model, at still a fairly large price point, will surely become the most popular among the larger scale of consumer.  This could very well be their most profitable model to date.

Don’t Just “Watch” This Stock

The Series 4 Apple Watch has been seeing success across the board as well. It has been receiving notable reviews by consumers. The new Apple Watch Nike+ devices is the next release in the Series 4 family. It includes a larger screen, thinner body, an ECG reader, fall detection, and more. It will also launch worldwide.

Most of the time Apple stock falls after earnings. A lot of people with inflated expectations decide to sell after earnings. Instead, Apple tends to rise during the long periods between earnings reports. In 8 out of the last 10 iPhone releases, AAPL slid immediately after the release and didn’t return to pre-release levels for about 60 days. Currently, they’re hitting all time highs two weeks after the release. Last earnings report, on 07/31/18, sent AAPL into an immediate uptick. The likes of 3% in a single day. Apple is set to release it’s Q4 earnings on November the 1st.

I Know First’s predictive algorithm remains bullish on AAPL stock in the long term.

To learn more about I Know First’s success and accuracy, click here to read our premium article about Warren Buffet’s long investment and how our algorithm successfully predicted and forecasted Apple’s record breaking year, before it happened.

The Newest Apple iPhone XS Revealed In September Summit

Apple’s September Summit Take-Aways

Last week, Apple kicked off their annual September event. Their main unveilings included the new Apple Watch 4 and the iPhone XS/XS Max. The XS saw it’s release on Friday, with the larger XS Max set to release in the coming week. As usual, the iPhone has upgrades to the previous iPhone X, which investors can be happy about because it’s another display of Apple’s way of incrementally and almost minimally upgrading a phone and gathering big sales in the process. Though it’s fair to say they are still delivering a premium product that can be called the best.

  (By Mike Deerkoski – Flickr)

The new Apple in-house built A12 bionic chip is giving competitors a run for their money. As expected, multi-core performance isn’t a vast difference over the A11 Bionic from the 2017 iPhone X, but single core performance see’s a noticeable improvement.

Upcoming For Apple

It should also be noted that the more affordable iPhone XR will be released in October. The Apple Watch 4’s release, which will receive more attention in the next article, will surely shake up sales as well. With these three new products, effects on stock should be noticeable in the coming weeks or month (especially during the holiday season and days like mothers/fathers day).

A few other advancements on Apple’s side that may effect sales are the new higher price of insurance/theft protection going up to $299 for a $100 increase. The removal of the headphone jack from the new iPhone may also lead to a boost in sales of Beats, AirPods and other bluetooth audio devices. Lastly, the battery price will increase after it was lowered for the year of 2018. Some people were left a bit disappointed following the summit, but I think this is Apple knows exactly what they are doing. With more to come this year including the highly anticipated new iPad and improved AirPods, the only way to go is up.

No Competition

In comparison to Android’s current flagships, it’s a clean sweep for the A12 all around. In tests run by Geekbench 4, 3D Mark, Slingshot Extreme and GFX Bench, the new chip powering the XS and XS Max destroys all the competition, with second place coming in to none other than their own iPhone X. The Bionic A12 proves to be the real deal. The A12 is generations ahead of others, but soon enough they will be releasing 7 nanometer chips of their own. QualComm claims to have a 7nm release coming soon.

As I mentioned earlier, the $3 billion company has not reached anything close to a ceiling and is still on the rise. It is worth another mention that Apple has mastered the art of business. They make great product, and at the same time truly know how to implement the right amount of upgrade in bits and pull in big sales throughout the year in the process.

(Pixabay)

I Know First is certainly bullish on AAPL stock, as detailed in this article published on May 1st

APPL stock is with 43% return since this bullish forecast.

Source: Yahoo Finance

2018 iPhone Aims To Disrupt Mobile Carriers

“Many people repeat the past. I’m not interested. I prefer evolution.”

-Issey Miyake

(Source: Flickr)

Throughout the history of the iPhone, there has been one thing that’s been by its sides this whole time: a SIM card. However, this may be disrupted soon as the grand debut of the eSim is coming. The eSim is a chip that is soldered to the phones circuit board, as opposed to a chip that’s inserted into the phone.

Apple wants this for a couple reason. For one, they have been trying to get rid of all ports on the iPhone to make it completely waterproof (remember the headphone jack?). However, the main reason is that it would allow users to switch carriers over the air at any time. Users would no longer have to get a new SIM card by mail or in person, increasing efficiency. Let’s say you are receiving poor service in a location. You have the ability to switch carriers on the whim without going to get a new SIM card.

(Source: DazeInfo)

Although this is a huge benefit for the users of the phone, it demonstrates a huge disadvantage for all mobile carriers. Being that users can switch carriers at any time, companies such as AT&T should be scared they’re going to lose business. This move would strengthen Apple’s customer relationships as they are more attached to the phone and less so the carrier.

Apple has already started implementing the use of this technology in their Apple Watch 3. The company uses eSIMs from STMicroelectronics for that model and are expected to continue to use them for the upcoming iPhone.

On April 3rd I Know First algorithm issued a bullish forecast on AAPL

AAPL gained 22.5% since this forecast

This bullish forecast for AAPL was sent to the current I Know First subscribers on April 3, 2018.

To subscribe today click here.

Apple Snags Media Giant Oprah Winfrey For Their Streaming Service

“The biggest adventure you can ever take is to live the life of your dreams.”- Oprah Winfrey

(Source: Flickr)

On June 15th, Apple formed a multi-year production partnership with Oprah Winfrey, the media tycoon. The two are joining forces to collaborate on content for Apple’s upcoming subscription based streaming service. It is currently unknown what Oprah will be producing, but Apple stated that, “Together, Winfrey and Apple will create original programs that embrace her incomparable ability to connect with audiences around the world.”

This partnership is a huge win for Apple because Oprah brings to the table her dedicated fan base. This phenomenon goes by the name of the “Oprah Effect”. The Oprah Effect is when any product associated or endorsed by Oprah Winfrey see a huge boost in sales. For instance, after Oprah Winfrey bought 10% of Weight Watcher stock, more than 600,000 members joined the program. Apple looks to carry over this trend to their new service with hopes that Oprah’s huge audience will start watching the new streaming service.

Oprah’s partnership is a drop in the bucket compared to Apple’s approximately one billion dollar investment into its streaming service. With decreasing iPhone sales, Apple hopes that this streaming service will be a home run for them. However, it is going to be competing against companies putting in more than triple the amount of investment into their streaming services, such as Netflix who just acquired former President Obama.

Following the announcement, Apple’s stock gained.

(Source: YCharts)

As Always Apple Tops Expectations and Stays Different – WWDC 2018

“You want to be the pebble in the pond that creates the ripple for change”

– Timothy d. Cook, Chief Executive Officer of Apple Inc.

[Image Source: T3.com]

As a follow up to last week’s article, Apple’s Worldwide Developers Conference (WWDC) kicked off on June 4, 2018 and many of the highlights that were to expect took place in the event.

The yearly event was entirely software-based this year, despite early expectations to see more hardware-related announcements. The event included all of the latest updates to Apple’s platforms- iOS, macOS, watchOS, and tvOS, along with some improvements to Siri and bigger plans focused on strengthening privacy and security and reducing technology addiction. These enhancements to Apple’s platforms were designed to optimize the overall Apple user experience.

So… What’s NEW?

[Image Source: cultofmac.com]

Craig Federighi, Apple’s senior vice president of Software Engineering, explained over and over how iOS 12 is all about making things faster and more reliable for new and older devices like the iPhone 6 Plus, which would see apps open up to 40% faster and the camera would launch up to 70% quicker. This is the ‘No iPhone Left Behind’ update with every device capable of running iOS 11 being ready to run iOS 12 when it arrives. In addition, the iOS 12 will also include a new feature called Group FaceTime. The video chat service that right now only connects pairs of people will enable up to 32 to chat online together. The change is significant and useful for friends jumping online together, family member chatting and business meetings with distant coworkers.

This inclusivity did not include Apple Watch users who have the first-generation watches launched in April, 2015 and were still available for porches 20 months ago. The WatchOS 5 capabilities go from competitive Activity Rings to enhanced web page interaction.It is part of Apple’s goal towards a solid, reliable experience with minimal bugs and no battery-throttling or hidden activities scandals bubbling up. Apple was reasonably upfront that it couldn’t deliver the experience it wanted with the first Watch’s hardware.

With Emphasis on privacy was paramount, Apple discussed how it was building on the features from last year which prevented cross-site tracking, to make adverts follow you around less.

The new MacOS software goes further. It will be possible not to be tracked on sites where there are Like or Share buttons from social networks. Intelligent Tracking Prevention, helps block social media ‘Like’ or ‘Share’ buttons and comment widgets from tracking users without permission.

The new tvOS 12 aerial screensaver features on Apple TV 4K, includes aerials shot from space by NASA astronauts aboard the International Space Station.

Siri update includes making suggestions based on the things the user does regularly, like ordering a soy latte from Starbucks every morning or ordering sushi on Sundays.

 

[Image Source: zdnet.com]

Apple also announced a new Shortcuts app as part of iOS 12 that lets the users tie together multiple steps into a single Siri request. Another new feature called Shortcuts works with third-party apps. For example, the phrase “Siri, I lost my keys” can pull up the Tile app, showing you where you left them. Shortcuts also work on the HomePod and Apple Watch if that’s where you talk to Siri.

Apple’s latest software-based updates satisfy expectations and follow with an increase of 3.2% in AAPL stock in past 5 days. Stock price jumped from $189.98 to $193.51 per share since WWDC 2018 event.

[Image Source: Yahoo Finance]

Following the above, APPL stock grows every year with WWDC announcements. With Apple’s new and improved software, AAPL stock is expected to continue growing in the long-term estimation, as long as it remains updated and innovative.

Apple Stock News: Privacy is a fundamental human right


[Image Source: engadget.com]

For the latest Apple news and with response to the new EU law, called General Data Protection Regulation (GDPR), Apple is promoting powerful privacy tools for iPhone, iPad, and Mac Users. Apple didn’t need to make any big changes in order to meet the stringent GDPR requirements thanks to its good privacy hygiene that its existing precautions already passed the new obligations. However, as the new privacy page reveals on the Apple website, Apple took the opportunity to rethink its privacy standards.

For each Apple pay transaction, Apple doesn’t track who the customer is paying and what they are paying for.  FaceTime conversations, iMessages and so on are end-to-end encrypted.  In Addition, every journey made on Apple Maps are also encrypted so that nobody getting hold of information could work out where you go.

Apple has made it easy to find out exactly what data of the customer is on its servers, from purchase history to photos on iCloud to emails and so on. It also has a recognizable page which warns the user when data is being collected. Apple’s response to GDPR is motivating and sets some standard which others must strive to meet.

On May 23, 2018, Apple’s new privacy site went live. It provides many privacy policies and tools, which range from useful to fascinating, all as easy to understand and use as possible. Since that day, AAPL stock went up by 1.22%, with stock price increase from $186.24 to $188.73 per share.

[Image Source: Yahoo Finance]

Following the above and like in many other domains, Apple’s market gain maintains also with their good privacy obligations that were adjusted and improved even before GDPR came into force. With that said, AAPL stock is expected to continue growing in the long-term estimation, as long as it remains updated and innovative in the privacy segments.

Apple’s leading Innovation Breakthrough followed by outstanding Q2 Fiscal Financial Results of 2018

“If you’re going to make connections which are innovative… you have to not have the same bag of experiences as everyone else does.” – Steve Jobs

Highlights:

  • Apple on the way to a breakthrough – carbon-free aluminum smelting
  • Financial Results for fiscal Q2 of 2018
  • Q3 Financial Guidance
  • Industrial comparison 

[Image Source: Fossbytes.com]

Apple on the way to a breakthrough – carbon-free aluminum smelting method

Aluminum is a key material in many of Apple’s most popular products, and for more than 130 years, it’s been produced the same way. Aluminum giants Alcoa Corporation and Rio Tinto Aluminum announced a joint project to commercialize original technology that eliminates direct greenhouse gas emissions from the traditional smelting process. This is a key step in aluminum production that if fully developed and implemented, will strengthen the closely integrated Canada-United States aluminum and manufacturing industries.

As part of Apple’s commitment to reducing the environmental impact of its products through innovation, the company helped accelerate the development of this technology. Apple has partnered with both aluminum companies, and the Governments of Canada and Quebec, to collectively invest a combined $144 million to future R&D.  “Apple is committed to advancing technologies that are good for the planet and help protect it for generations to come,” said Tim Cook, Apple’s CEO.

This follows Apple’s announcement last month that all of its facilities are now powered with 100 percent clean energy and 23 of its suppliers have committed to do the same.

 

[Image Source: GlobalMediaIT]

Q2 Financial Results of 2018

On May 1st, 2018, Apple announces its financial Q2 results of 2018. Apple achieved a quarterly revenue of $61.1 billion, 16% increase from Q2 of 2017, quarterly earnings per diluted share of $2.73, up 30%, and generated over $15 billion in operating cash flow. International sales accounted for 65% of the quarter’s revenue. In Q2, iPhone X was sold more than any other iPhone each week and the company’s revenue in all geographic segments grew, with over 20% growth in Greater China and Japan. As for this financial Q2 report, Apple’s board has approved a new $100 billion share repurchase authorization and a 16% increase in their quarterly dividend. Reflecting the approved increase, the board has also declared a cash dividend of $0.73 per share of Apple’s common stock.

Apple is expected to continue to net-share-settle vesting restricted stock units. From the inception of its capital return program in August 2012 through March 2018, Apple has returned $275 billion to shareholders, including $200 billion in share repurchases.

The Company will complete the execution of the previous $210 billion share repurchase authorization during Q3.

Q3 of 2018 Financial Guidance

  • Revenue between $51.5 billion and $53.5 billion
  • Gross Margin between 38% and 38.5%
  • Operating Expenses between $7.7 billion and $7.8 billion
  • Other Income/(Expense) of $400 million
  • Tax Rate of approximately 14.5%

Following the above AAPL stock increased by 12% and my assumption is that it will continue to grow given the high revenues and increasing sales with each quarter of 2018.

[Image source: Yahoo Finance]

Industrial Comparison

Apple Q2 of 2018 Electronics Industry Q1 of 2018
Revenue Quarterly Growth 16% 11.2%
Gross margin 13.75% 58.12%
Operating Income 12.75% 22.59%
Net income 25.33% -45.77%

Presented above is the industrial average growth comparison with Apple’s Q2 growth results of 2018. As shown, one can see that Apple is above the industry average growth in Revenue quarterly growth by about 5% and in Net income Apple is up 71% compared to the industry average.

Today, in my point of view, Apple leads the world in innovation with iPhone, iPad, Mac, Apple Watch and Apple TV. Apple’s four software platforms — iOS, macOS, watchOS and tvOS — provide all-in-one experiences with all Apple devices and inspire people with advanced services such as App Store, Apple Music, iCloud etc. Therefore, based on Apple’s advancing technology techniques and growing results I believe AAPL stock will go up in the long term and increase a “buy”, priority over its competitors.

[Image Source: truonghocdautu.com]

My long-term estimation for AAPL is supported by an optimistic one-year forecast from I Know First. The 1-year forecast illustrates a signal of 52.89 and a predictability of 0.7. The 0.7 predictability score for AAPL is saying I Know First’s self-learning Artificial Intelligence has a long history of correctly predicting the one-year market performance of AAPL.

Past I Know First forecast success with Apple

I Know First has made accurate prediction on Apple on August 3, 2017

AAPL is with 21.5% gain since this bullish forecast.

This bullish forecast for AAPL sent to the current I Know First subscribers on August 3, 2017

 

[Image Source: Yahoo Finance]

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 Stock Forecast: The $299 Apple iPad 2018 Is A Killer Gaming/Enterprise-Level Tablet

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:

  • The new 9.7-inch iPad 2018 is not only intended for the education market. It can also appeal to home and business/enterprise users.
  • Apple equipping the $299/$329 iPad with A10 Fusion CPU/GPU also makes it the best gaming tablet.
  • The 6-core PowerVR GPU of the quad-core A10 Fusion SoC is almost as good as the A11 Bionic’s Apple-made GPU.
  • Apple is taking a risk. The $299/$329 9.7-inch iPad might cannibalize future sales of premium $649++ iPad Pro models.
  • On the other hand, Apple could likely increase the total addressable market of its tablets by catering to price-conscious customers.

Apple (AAPL) ended 2017 as the top vendor of tablets with more than 26% of global market share. I expect it to remain the leader in tablet shipments for many years to come. Apple’s decision to offer its latest sixth-generation 9.7-inch iPad for just $299 to students/schools (and $329 to regular customers) can help it sell 13 million+++ tablets quarterly.

The future impact of Apple’s event yesterday goes beyond the education market. I expect this latest budget tablet to appeal not only to students/schools but also to gamers and home/office users.  By making this latest iPad compatible with the Apple Pencil stylus, small and medium business (who couldn’t afford $649++ 10.5-inch iPad Pros) might likely become new customers. The enterprise/business market for tablets is obviously much larger than the K-12/college education market.

The image below illustrates why corporate employees and business owners should consider buying a $329 iPad.  It’s a semi-iPad Pro!

(Source: Apple)

Apple Is Not Afraid of Taking Risks

Yes, there is some risk that a $329 iPad can cannibalize future sales of much more expensive iPad Pro models. However, companies who do not take risks are inept. The bright side of this new move is that Apple is betting it could increase its total addressable market by selling an affordable enterprise-level iPad. Apple now offers an enterprise-level tablet for less than $350.

Apple selling a budget tablet can help attract small/medium enterprise customers away from sub-$300 Windows 10 laptops, Chromebooks, and Android tablets. The A10 Fusion SoC-equipped $329 iPad 2018 can function like the premium iPad Pros (equipped with A10X SoC) in the office, on the road, and at home. The single-core processor compute performance of the A10X Fusion is just 14% faster than the A10 Fusion.

The 2018 iPad is compatible with the $99 ($89 for students/schools) Apple Pencil or other third-party brand of stylus. Furthermore, Apple has made new updates to its free iWork productivity suite to make it Pencil/stylus-compatible.  Apple might also extend the free 200GB iCloud storage to non-student users of the $329 iPad 2018. An improved iWork office suite coupled with free large cloud storage per user is an attractive proposition for small and large enterprise buyers.

The lower hardware margin on the 2018 iPad can be offset through sales of Apple Pencil and iTunes purchases. Some digital artists, employees, students, and teachers will eventually buy iOS apps/games, e-books, streaming TV/Music/movie subscriptions through their company or school-issued iPads.

Mobile Gamers Will Also Appreciate This Cheap iPad 

Many K-12/college students/teachers are gamers. They will certainly appreciate Apple’s use of the A10 Fusion SoC (System-on-Chip) on the $299 iPad 2018. The integrated 6-core PowerVR-based GPU (Graphics Processing Unit) n the A10 Fusion SoC is as good as Apple’s own integrated GPU for the A11 Bionic SoC.

Based on the Arena of Valor (Ultra Graphics Settings) test of Notebook Check, the A11 Bionic’s GPU is only 2% better than the PowerVR GPU of the A10. That’s a negligible difference. Due to its affordability, the iPad 2018 can become the best tablet for casual and hardcore mobile gamers.

(Source: Notebook Check)

The advent of console/PC-quality iOS games like Arena of Valor and Fortnite is boosting the mobile platform as the growth driver for video games. It makes perfect sense for Apple to sell a $299/$329 gaming tablet that can outperform Android tablets with Nvidia (NVDA) Tegra K1 GPUs. Keeping its number one status in global tablet shipments requires Apple to cater to mobile gamers.

Selling a budget iPad increases the number of iOS gamers. The more iOS gamers there are, the better it is for Apple’s 30% commission rate from iTunes App Store purchases.

Final Thoughts

Apple’s move to release a budget iPad that can be used for enterprise productivity and high-end mobile gaming is commendable. It is another good reason to stay long AAPL. The management of this company is ready to take risks which could lead to better long-term iPad sales.

I Know First has a very bullish one-year market trend forecast score (more than 200) for AAPL. I am therefore endorsing this stock as a buy.

The monthly technical indicators/moving averages of AAPL also supports my buy rating for AAPL.

Past I Know First Success With AAPL

Apple_forecast20180218

On February 18, 2018, I Know First published a premium article saying that it’s time to buy Apple’s stock as it would likely be growing in price in 2018. I Know First has been bullish on Apple’s stock on 1, 3 months and 1 year time horizon. As the time went by we expected that Apple’s stock would likely to significantly rise, especially in 3 month and 1 year perspective and hit the level of $170-$180 per share which has already happened. We suggested to buy it at that time and not to lose the increasing momentum. From the below graph one can see that on 1 month horizon the algorithm successfully predicted the movement of the AAPL stock price which is rise by 5.31%.

(Source: Yahoo Finance)

This bullish forecast for AAPL was sent to I Know First subscribers on On February 18, 2018.

To subscribe today click here.

I Know First Algorithm Heatmap Explanation

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 position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

autodesk stock forecast


autodesk stock forecast

 

 

 

 

Apple Stock Forecast: Bullish Long Drive Goes On In 2018 – Apple’s All Time Records In Q1

Gleb ZInkovskii_photo

 

 

 

The article was written by Gleb Zinkovskii, a Financial Analyst at I Know First.

 

“I think the artistry is in having an insight into what one sees around them. Generally putting things together in a way no one else has before and finding a way to express that to other people who don’t have that insight…”

– Steve Jobs, Smithsonian Institution Oral and Video Histories, April 20, 1995

Highlights:

  • iOS 11.3 preview release – New AR experiences with ARKit 1.5, Health Records – collaboration of Apple with hospitals and clinics
  • Apple opens first official store in Seoul, South Korea expanding its worldwide presence to 18 countries
  • Apple introduced new product in an effort to stay competitive with Google Home and Amazon Echo – HomePod
  • Q1 2018 results are released – all-time records from all perspectives

Apple iphone x

[Source: Flickr.com]

iOS 11.3 release preview: another small step forward for company – big user experience jump

Apple presented its flagship iPhone X device on September 12, 2017 which provided the hardware basis for iOS 11 and empowered it to bring incredible new user experiences like Augmented Reality (AR) and complex face recognition solution for unlocking device and animating Emojis in real-time. Since then the features of the iOS were multiply challenged by many industry experts and the public in respect of the value being brought to customers for the price of iPhone X. Although, real-time animated Emojis are actually a powerful and fun tools to sell the device to Apple fans, the true capabilities horizon of the hardware and software is clearly not utilized so far. The preview of the new iOS version brings new perspectives on future user experience and applications with the updated ARKit, enabling developers to create applications that support AR not just in horizontal but vertical planes. Although it may sound vague from first perspective, actually is an enormous jump into the world of interactive surfaces like walls, posters, paintings, ads, etc. As a result, the potential value of such technology arriving at your palm may result in completely different approach for targeted advertisement and entertainment.

Another highly anticipated by the public feature which was mentioned in the preview and had its own separate press release is Apple Health Records. “Our goal is to help consumers live a better day. We’ve worked closely with the health community to create an experience everyone has wanted for years — to view medical records easily and securely right on your iPhone,” said Jeff Williams, Apple’s COO. “By empowering customers to see their overall health, we hope to help consumers better understand their health and help them lead healthier lives.” Some experts compare this functionality to Apple Pay or Siri with respect to the impact scale on our lifestyle and the way we do our routine and for sure Apple is the company which is capable of taking the lead in such initiative. Another story is for investors to estimate the impact of such technologies’ introduction onto Apple’s value and for sure it will buzz the investor community for some time. Also, investors should consider that the same way Apple Pay stimulated new evolutionary step in online cashless payments, the same way Apple Health Records may become an environment for both offline and online medical care services which has extremely wide market reach and where they will be able to unify around patient’s needs and deliver care in extremely time-efficient and affordable manner. As for the Apple’s investors it is not clear how it will drive the company’s value in short term, but it is to be said that so far technologies which Apple introduces take some time for public to absorb and realize their true potential but when it happens the value sometimes exceeds even most optimistic analyst’s expectations.

Based on the above and the fact that not all of the Apple devices support AR and functionality yet even if they have iOS 11 installed, the hype around the mentioned technologies is capable to significantly drive the demand for the latest devices (iPhone X and iPhone 8). The latest sales results for Q1 2018 (published on February 1, 2018) support this statement as the number of iPhone X units sold rose by 66% and corresponding 113% increase in revenue comparing to Q4 2017 contributing to the overall rise in company’s sales. Additionally, one should reasonably expect intensified demand for the actual services to be provided based on those technologies which will drive additional revenues both directly to Apple and indirectly through third-party developers.

Apple opens first official store in Seoul, South Korea expanding its worldwide presence to 18 countries

Everybody knows what an Apple store is. Everybody knows that Asian market is constantly seeking for new trends, technologies and products. Apple is not an exception and that’s why the first official apple store opened in Gangnam area in Seoul. Although the penetration to the South Korean market is a hard thing to do for a foreign company as the dominance there lies with Samsung and LG, the expansion to this market sends a clear message. “We’re thrilled to open a new home for our customers in the vibrant city of Seoul and we look forward to continuing to grow in Korea,” said Angela Ahrendts, Apple’s senior vice president of Retail. “Our stores are gathering places for the community where everyone is welcome to connect, learn and create.” As ambitious as it sounds, it literally shows strong intention of the company not just to sell its products, but also expand its Apple culture influence to this market being close by it Korean current and future fans. The concept of an official Apple store is also important from marketing and sales perspective, because the new products and services are always start to sell first at official stores rather than at distributors. Therefore, it will give Apple the required means to effectively compete with Samsung and LG and take its piece of cake from this table. This statement is completely in line with the sales statistics being recently published by Apple – the sales growth in Asia Pacific region (excluding Greater China and Japan) in Q1 2018 was 144% and 17% comparing it to Q4 and Q1 in 2017 respectively.

Apple_smartphone_market_share_south_korea

Share of smartphone models sold in South Korea during the month of July 2017, by model [Source: Statista]

Apple introduced new product in an effort to stay competitive with Google Home and Amazon Echo – HomePod

It has been more than 2 and 1 years, respectively, since the release date of Amazon Echo and Google Home. The success of both devices is sometimes questionable and depends on the geography where the associated services are available for both devices. The idea of a smart home and devices which actually assist you in managing your household became not just a buzz but a practical set of tasks to be done by them. However, if you have certain restrictions for services to be utilized by those robots you cannot guarantee the success for such environments among the general public worldwide. Apple did not get into this competition for a while and seems to learn the mistakes done by Amazon and google. As a result, the new product – HomePod – orders on which were opened on February 9, is positioned as “Breakthrough Wireless Speaker that Brings Audio Technologies Into Any Home for an Incredible Listening Experience”. If we chop this motto into pieces it may seem that the competition is not going to be with Amazon or Google, but with audio giants like Bose or JBL. However, in the context of the sales statistics for the home assistant devices and home and portable audio speakers it is clear that the last ones were true success stories and insanely profitable market worldwide. From investor perspective it also seems as a good idea for Apple to compete with this new product in audio industry which is close to the cornerstone products and services like Apple Music, iPod and iPhone. Apple definitely shows a nice strategic approach to this new product, although it does not forget about the Siri – that assistant which became part of the Apple fans’ lives and sometimes a subject for jokes. Official press release says: “With support for HomeKit, HomePod can control hundreds of home accessories or set scenes like, “Hey Siri, I’m home,” to control a number of different accessories at the same time.” It makes clear that the experience gained by the public so far shaped the demand for a specific home assistant functionality which is more of a control hub for already exiting devices scattered around your house, and it is more of a nice touch to have for a more desired primary need – set up a nice mood by turning up good musical vibes. It seems to be a nice entrance point to this market for Apple as a sovereign player and it seems a good move from strategic perspective which investors expect from the Apple management team.

Conclusion – Q1 2018 results released

Based on the press release of the results for the Q1 2018 one should be totally amazed by financials – revenue of $88.3 billion, an increase of 13 percent from the year-ago quarter and quarterly earnings per diluted share of $3.89, up 16 percent. However, if we look up closely to the summary data for the quarter we will see that the most contributing to the overall growth item from the products range is not the newest iPhone X, but “Other Products”[1] section – 36% growth in Q1 2018 comparing to Q1 2017. At the same time we can see that although sequential revenue growth of 68% from Q4 2017 to Q1 2018 is significant it achieved by 113% growth produced by iPhone X and 70% growth produced by Other Products”. iPad and Mac products demonstrated insignificant changes in revenues ranging from -4% to 21% and from -5% to 18% for quarterly sequential and Year-year comparables. Such performance does not seem bad for general public as the market for tablets and laptops are not that dynamic nowadays, but from a strategic perspective it could become a worrying sign of the main revenue drivers’ convergence to just smartphones and accessories like Apple Watch. However, this worrying signs are smoothed out by the introduction of HomePod which may contribute significantly to the Apple environment value proposition to current and potential customers, but also by the fact that Apple became one of the biggest beneficiaries of the current US tax reform. The fact that Apple decided to repatriate extreme amount of cash from overseas which becomes available for reinvestment on US soil and, potentially, for dividends payout accompanied by the company’s stock buy-back program gives strong potential for further freedom to spend it on R&D and M&A activities. The best way to give sense of how much cash became available to Apple belongs to Luca Maestri, Apple CFO: “We have plenty of financial flexibility, of course” and from the published financial statements we can understand that it literally means almost $285 billion. In overall, Apple’s stock performance over Q1 2018 and the period until the press release of the financial statements was above industry benchmarks, but started dropping starting from the middle of January with a slight spike up around the date of the press release.

Apple_20171001_forecast

[Source: Yahoo Finance]

I Know First Forecast on Apple

As far as we have the release of the first quarter fiscal 2018 results of Apple at our disposal, I do believe that the company will continue to show increasing sales of the new iPhone X. However, there is a certain ambiguity around the other revenue drivers and the extent of dividends to be paid to the shareholders. As Tim Cook, Apple CEO mentioned at the annual shareholders meeting held on February 13, although the company has lots of available cash, but it is unlikely that all the amount will be spent in a form of special dividend. As far as it represents the strategic vision of the board on the activities of the company being aimed at investment into R&D and potentially M&A, one should not expect some quick win from the status of Apple shareholder. In my view, as of today the most of the value which shareholders needs to be expected within the long time horizon and we should expect the improvements due to conceptually new products, services and features being proposed as a result of the company’s investments. The I Know First forecast supports my opinion that in short term of 1 month the stock will be rather bullish than neutral with relatively significant predictability and is going to become even more bullish over 3 month and 1 year time with the signal and corresponding predictability increasing over those periods.

Apple_forecast20180218

Past I Know First Forecast with Apple

In May 22nd, 2016 Motek Moyen, a Senior Financial Analyst at I Know First, published an article about Berkshire Hathaway investing $1 billion into Apple Inc. shares just afterwards of Carl Icahn exit from the number of Apple’s shareholders. As per the reports of Berkshire Hathaway at that time it increased its holdings in Apple and went long on it with 23.3% shares. Motek’s bullish endorsement for Apple was backed by the positive algorithmic forecasts from I Know First. The 1 month, 3-month and 12-month algorithmic forecasts for AAPL were all positive.

Current I Know First subscribers received this bullish forecast of AAPL on May 22 nd, 2016.  

To subscribe today click here.

Since then, in accordance with the above I Know First forecast Apple’s stock price gained more than 70% in 1 year and continues to grow further as shown on the below graph:

Apple_1year[Source: Yahoo Finance]

I Know First Algorithm Heatmap Explanation

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 position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

How_to_read_IKF_heatmap

To subscribe today and receive exclusive AI-based algorithmic predictions, click here.

[1] Includes sales of Apple TV, Apple Watch, Beats products, iPod touch and Apple-branded and third-party accessories [Source: Apple Inc. Q1 2018 Unaudited Summary Data, Official Apple Inc. Press Release on February 1, 2018]

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Apple Stock News: Despite fall in IPhone sales, Apple profits up in last 3 months of 2017

Apple announced financial results for its fiscal 2018 first quarter ended December 30, 2017. The tech company has reported a record-breaking income for the last 3 months quarter increased by 12% year on year to $20 billion, despite a drop in iPhone sales.

According to the International Data Corporation (IDC), despite iPhone sales dropped by 1 million devices to 77.3 million smartphones, the giant became leader of the quarter in smartphones market with 19,2% of share. Samsung has 18,4%, Huawei 10,2%, Xiaomi 7%, Oppo 6,8%. The global smartphone decreased by 6.3% in comparison to the same period of 2016.

“We’re thrilled to report the biggest quarter in Apple’s history, with broad-based growth that included the highest revenue ever from a new iPhone lineup. IPhone X surpassed our expectations and has been our top-selling iPhone every week since it shipped in November,” said Tim Cook, Apple’s CEO. “We’ve also achieved a significant milestone with our active installed base of devices reaching 1.3 billion in January. That’s an increase of 30 percent in just two years, which is a testament to the popularity of our products and the loyalty and satisfaction of our customers.”

Apple also is providing the following guidance for its fiscal 2018 second quarter:

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

On March, 9 2017 I Know First issued a bullish 1 year forecast for Apple. The forecast illustrated a signal of 102.08 and a predictability of 0.57 (explanation on signal and predicability indicators can be found here). In accordance with the forecast, AAPL’s stocks increased during the year by 14.82%.

This bullish forecast for AAPL sent to current I Know First subscribers on March 9th.

 

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