🍎Pika World Insights: Apple🍐

💎Plenty of Merry💎

Apple stock has been on a remarkable ride. The stock price had mooned by about 141% for the past 2 years, almost reaching the $3 trillion market capitalization given the strong growth across different segments ranging from iPhones, Macs, iPads, and wearables. More importantly, services now is a primary driver of the group revenue. 

So what are some catalysts to push the price higher?

💰#1: Healthy iPhone demand🗽

Pika World takes a contrarian view on the expectation of weaker consumer hardware demand in the coming year. The large installed base of Apple means potential for more rooms of upgrades, especially with the rollout of 5G in many countries. 

It is expected that iPhone 14 will come with a swifter processor and longer battery life that could help meet exactly what consumers yearn for. In addition, a foldable phone is also possible in 2023. 

⌚️#2: A VR/AR reality Headset💡

It is expected to debut in the second half of 2022, and there appears to be optimism for growth in this segment. More details could be released in June 2022 where Apple usually holds its annual developers’ conference. Some analysts expect the device to be priced from $750 to $1000, potentially delivering material revenue growth for Apple. 

🏋️#3: Service business segment is shinning💎

While there are regulatory hurdles and litigation on the payment gateway, Pika World believes it will not have a material impact on the company as most analysts thought. Users may prefer a sense of convenience and security and pay slightly more. For developers, their chase for higher-margin using off-store billing may lead to a lower conversion rate and ultimately lower revenue. Hence, there isn’t a strong incentive for both users and developers to move beyond the current pay model. 

💵#4: Strong balance sheet for dividend growth⛳️

Apple generates about $100 billion of free cash flow annually. It has always issued large shares buyback plans in May for the past 4 years. There could be another $90 billion authorization buyback ahead and a possible dividend hike. 

🚘#5: The rumour Apple Car🚖

The prospect of an Apple car gives joy to investors. It is expected to be an outsourced production and could contribute up to a 15% increase in sales. In addition, immense opportunity can come with an IT ecosystem for Apple cars that can further contribute to service revenue, encouraging a robust expansion of higher margin for the service business segment. 

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Cheers, 

Pika Nat.