“A quick headline revealed that Apple Music now has 11 million paying subscribers,” Ophir Gottlieb writes for Capital Market Laboratories. “But the top 1% read that headline quite differently and it has nothing to do with Apple Music.”
“Recurring revenue is the most critical shift in technology in the coming decade and it is the critical theme driving the FANG stocks: Facebook (FB), Netflix (NFLX), Google (GOOG) and Amazon (AMZN), higher,” Gottlieb writes. “FANG is the biggest bet on recurring revenue we have ever seen. Facebook (FB) and Google (GOOG) rely on advertising – that’s considered recurring. Netflix (NFLX) has a recurring subscription service for streaming video on demand (SVOD) which is sweeping the world. Amazon (AMZN) has both its cloud service (AWS) and Prime service… Apple has had enough: The company has just stepped in – and we don’t need an acronym for it – it will soon stand by itself as the single largest recurring revenue machine the world has ever known. Don’t look to Apple Music – that’s the distraction.”
“Apple services is about to become so large that revenue from services alone will be larger than all of Facebook’s total revenue in 2015,” Gottlieb writes. “iPhone is suddenly recurring… Apple has now combined direct financing with automatic upgrades that will be paid to Apple each month, on a recurring basis. That last sentence could mean $300 billion in market cap to Apple, and here’s why.”
Read more in the full article here.
MacDailyNews Take: Apple’s recurring revenue potential is often overlooked.
SEE ALSO:
Apple highlights services in search of Wall Street’s love – January 26, 2016
[Thanks to MacDailyNews Reader “David E.” for the heads up.]
While this headline is absurd, the MDN comment is somewhat true, if you think about Apple 3 years ago.
The Apple money is used by banks to lead wars and feed the rich. It is not used to innovate as innovation is always a loss of profit on recent products, right?
Apple seems to be stuck in the 80ies, when Wall Street was everything. Apple has lost its innovation credibility and the proof is a watch that does not make sense, a watch nobody really needs….
….a toy that represents the lack of inspiration and genius that this company once was famous for.
Where is the spirit of Steve? Where is it? Where?
Fire Tim so we might buy Apple stuff again. Until that day, not a dime from us !
Enjoy your Galaxy 7
I love my Apple Watch. Would never leave home without it.
I left home with it mine this morning and turned around to get it
Without
‘Us’ meaning you and your dog?
Dude, it’s okay. You’re allowed to come out of your reality-distortion field and breathe fresh air.
Clueless
I know he’s a troll. But just this once. Troll go back to your bedroom and go to bed before your dad spanks you.
Ballmer 2007: “a phone nobody really needs….”
Another nonsense headline. Everyone knows Apple’s share price isn’t going up. In fact, there’s more likelihood when Apple announces the smaller iPhone in March the share price will drop even further. Every product Apple introduces is only seen as another disappointment to investors. The amount of money Apple makes has absolutely no positive effect on AAPL’s share price or the share price wouldn’t have been falling for all of 2015.
It’s relatively common knowledge Apple’s share price performance is being outperformed by some of the crappiest companies on Wall Street. Forget even comparing the F.A.N.G. stocks to Apple. Those darling stocks are unbeatable. They’ve left Apple in the dust. All Apple does is attract negative controversy and shareholders don’t need or want that. just knowing Microsoft is worth nearly a 4X premium to Apple is enough to leave my stomach churning. No one willingly wants to own part of a tech company with the value of a dying steel mill.
💩💩💩💩💩 troll
Many think that Apple is a riskier stock to own compared to Google or Facebook because Apple products can easily be made obsolete by competition. This has not occurred. In essence, Apple has created a recurring product and service revenue business. There is always a risk some company could invent a game changing technology that makes computers, smartphones and tablets obsolete, but I don’t see anything on the horizon. Some might think AR glasses will become popular, but the backlash against Glass proved this type of device won’t gain mass acceptance. They will sell, just not in the quantities some are modeling. The only product that might be disrupting is something that can be worn around the ear, and then when requested, a screen made of light would project in front of a user’s eyes. Even with this screen capability, many interactions will just be made with the voice enabled virtual assistant. Additionally, if some company invented a totally new paradigm it would take several years to reach mass manufacturing scale. The risk that Apple is upended by game changing tech is very low.
What about the risk of owning Google and Facebook? Both companies make money from selling advertising. Is there a risk that their companies will be disrupted by new technology or by competition? Conversational AI will be here shortly, and it will make querying for things easier than ever. Personally, I’m using Siri for many more things these days like converting units, checking spelling, defining words or searching for places and businesses on Apple maps, etc. I think AI in combination with adblockers will decrease Google’s advertising revenue. Are people going to accept a 15 second audio ad when using their Android virtual assistant?
In Facebook’s case many users might have accounts, but don’t use the system. For example services like Snapchat and Instagram are much more popular with many. Instagram is a Facebook owned property, but profiles can be viewed without having to login to Instagram. It also seems like there are new social services popping up everyday. And what about AI? What happens when FB users can use virtual assistants to interact with their accounts? Is Facebook going to bombard users with audio ads, and, if so, will usage decrease? Do they deserve an 83 P/E when it appears their business model is riskier than others?
Finally, Apple is buying back stock and has a lot of cash. At the current stock price the company will be worth their cash equivalent in six or seven years. How many years will it take Google to reach this feat; thirty years? Six years seems less risky than thirty years. Overall, Apple is much less riskier to own than most companies on the market. The low price of the stock is unjustified.
They make money by selling you to governments.