I’m cautiously neutral on Apple’s year ahead. Opinion, not investment advice.
Summary
  • Apple has enjoyed a decade of unrivaled growth in the smartphone market. But…
  • Running through the different business segments, both new and old, doesn’t show a real way for them to replace stagnating iPhone sales.
  • With a busted rollout of IoT and Autonomous Vehicle Technology, the Apple Watch seems to be the only winner moving forward – unless they pull a rabbit out a hat.
  • All in all, I’m cautiously neutral on the company’s year ahead after the rollout of the most recent, camera-infested, iPhone 11.

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iPhone Sales: Stagnant

There’s no telling when a truly exciting new feature will be released as part of a new iPhone, and that very well may be next year which will then drive a 25% increase in iPhone sales. But for the time being, stagnating sales is what’s expected throughout September 2020 when an additional camera will be added to the back of the iPhone 11 and released as the iPhone 11s.

Services Growth: Approaching Bell Curve

…it’s now apparent that this too is slowing down and will not continue growing forever as users seem to have peaked with their level of spending enthusiasm on the various services the company has to offer. Even though the company will continue to grow its user base along with population growth and some improvements in household incomes, the high growth rate seems to be stagnating for the time being.

Streaming: Limited Growth

The fact that Apple has a massive cash stream to develop its own content does not guarantee success in this area… If we hop over into Narnia and assume that Apple will get all those Netflix subscribers to join their service, it will barely cover a 10% fall in iPhone revenues and won’t amount to anything close to the profits that will be lost from that decrease.

Future Technologies: Lackluster Investment

Arguably, the two major technologies which are showing the most promise as we head into the third decade of the 21st Century are the Internet of Things and Autonomous Vehicle Technology.

The Internet of Things, as I talked about in more depth in my previous article, is the connectivity of all the devices and “things” in your life. …Apple released their version of the HomePod late and with several glitches with no ability to securely connect to your major appliances without having a masters degree in electrical engineering or software programming.

In the autonomous vehicle segment the company has been inconsistent as well. …Since these programs are secret it’s unclear exactly how advanced the company is compared to rivals and most major car companies as well as various private Chinese and European companies working with state funds.

The Bright Spot: It’s Coming From Your Wrist

The Apple Watch is the one bright spot for the company’s future. … As mentioned in another article I wrote way back, the prospects of the Apple Watch in the healthcare field alone are mind boggling.

The more human-focused approach to this is that the Apple Watch is actually saving lives and improving lives and lowering stress of those in danger of certain medical conditions. This alone will drive demand if the company continues to focus investment and improve these services within their smartwatch offerings, which they are.

Investment Conclusion

As stated, the company has multiple opportunities to drive sales and profits and it’s not like they’re suffering right now. After all, their services revenues alone are higher than Uber and Lyft combined. …

All in all, I’m not ready to turn bearish on a company that makes so much money from so many different sources and has an R&D budget similar to the state budgets of Montana and South Dakota combined.

Even so, I’m by no means ready to jump in on the promise of endless cash and revenues from new iPhones or from the launch of a streaming platform and would need to see serious improvements before turning bullish again.

All in all, I’m cautiously neutral on Apple’s year ahead.