The stock market rollercoaster is going full bore. Up, down, up, down… But, Apple stock will rocket on 5G iPhone demand, ushering in a new super cycle, one analyst says.
After plummeting 16.5% on worries over the coronavirus, Apple shares reversed course, driving Monday’s broad stock-market slingshot rally. On Monday, Apple jumped 9.3%, the stock’s best one-day rise in more than 11 years.
The truth is, Apple bulls never lost faith. While the company has cautioned that March-quarter revenue won’t hit its original guidance range of $63 billion to $67 billion, due to both supply-chain and demand issues related to the virus, there’s spreading optimism that demand is being delayed, not destroyed — that people who don’t buy their next iPhone in the March quarter will simply buy it a quarter or two later.
He contends that a “perfect storm of demand” is forming for Apple — and that 350 million of the company’s 925 million iPhone customers are “in a window of an upgrade opportunity.”
While the last few weeks has been an exogenous ‘shock event’ to Apple’s ecosystem on both the supply and demand side due to its China exposure, we believe this will be short lived as the longer term 5G super cycle thesis and services re-rating remain the crux of our bull thesis on Apple for the next 12 to 18 months… Clearly there will be some speed bumps along the way as Cupertino navigates the coronavirus outbreak. However, we continue to focus on the golden installed base, pent up iPhone upgrade demand activity, and 5G super cycle on the horizon as core components of our bull thesis, along with the $50 billion+ annual services business. — Wedbush analyst Daniel Ives
MacDailyNews Take: Yup. Apple’s 5G iPhone will mark the beginning of a multi-year super cycle.
Just as iPhone this year is all about the camera, next year will be all about 5G. Get ready for the Mother of All iPhone Super Cycles! — MacDailyNews, December 23, 2019
Stock Market101: Wall Street doesn’t control, decide or “set” the price of a stock. Nor does it “refle ct” the state of the economy, let alone the state of any company represented.
For example, the success of Apple (or lack thereof) has no direct effect on the price of Apple’s stock. Rather, when traders are (in general) more interested in selling it than buying it, the price of a stock declines. The opposite is also true.
If you “Play” the stock market (trade) you quickly discover the only way to make money on a rising stock is to be among the first to buy it (when it is still low). And the only way to avoid losing money on a declining stock is to be among the first to sell it (when it is still high). The net result, folks, is traders don’t watch the company behind the stock. They are watching each other. If a few start selling a stock, the rest rush to sell it, too. If they hear some news (or some analyst’s comments) that they think will cause other traders to react, they will try to be among the first to so react. Thus they become a self-fulfilling prophecy.
Investors, on the other hand, are interested in the company. They buy and hold for the long term. For them, it’s a savings account with (hopefully) a better return. But because of this, Investors don’t influence price changes in any way.
Wall Street is not smart, stupid or clueless. People who cry, “They just don’t understand Apple,” don’t understand the market. It’s a mob-mentality, pure & simple. They don’t care about you, me or Apple. They only care about each other and any “skill” they may have is simply the ability to predict what other traders might do before they do it.
In other words, “traders” are like sheep… If a few suddenly start to run, they all run and in the same direction. Only afterward will analysts attempt to figure out why.
What’s the solution for Apple? Minimize their reliance/exposure to traders. So, you begin share buy-backs and bond issues – with an eye toward reducing your risk (from traders) or perhaps one day eliminating it! (Get out of the stock market and go private. All they’d really need is lots of money to fund themselves! Hmmm.)
I’ll get off my soap-box, now.
Step right up folks, place your bets!