“Apple posted extraordinary results last quarter,” Adam Levine-Weinberg writes for The Motley Fool. “iPhone unit sales surged 46% year over year and iPhone revenue grew at an even faster 57% rate.”
“However, iPhone sales growth is virtually certain to slow to a crawl by 2016,” Levine-Weinberg writes. “Luckily, this doesn’t mean that Apple stock is doomed. Beginning later this year, sales growth in Apple’s other product lines (including new products like the Apple Watch and Apple Pay) will start to offset slowing iPhone growth. As Apple starts to diversify its earnings away from the iPhone, its valuation should rise.”
“In the first year of sales, the Apple Watch could bring in $10 billion of revenue even if only 5% of iPhone users buy one. That’s significant even by Apple’s standards,” Levine-Weinberg writes. “Apple Pay will take longer to mature. Apple gets 0.15% of the purchase price for Apple Pay transactions, so it would need to support $1 trillion in purchases to generate $1.5 billion in revenue. But global credit card/debit card payment volume is already well beyond $10 trillion annually and growing strongly. Apple Pay could conceivably process trillions of dollars of purchases a year a decade from now.”
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