Apple’s stock market rally seems to have no end. Today, the iPhone maker’s stock hit a record $300 per share, closing at $300.35.
By Chand Bellur
January 2, 2020 at 7:07 p.m. PDT
Apple Stock Exceeds $300 Per Share
Apple investors are ringing in the new year with capital gains. With a stock that seems unstoppable, Apple started the year edging its share value past the $300 mark.
Closing at $300.35 today, this marks the first time Apple stock has surpassed $300, when adjusting for stock splits. While this is good news for investors, there is some cause for concern. Some analysts accuse Apple of setting a low bar and exceeding it in order to boost stock value.
Is Apple Stock Overvalued?
Most analysts feel that Apple stock is overvalued. Although some analysts, such as Gene Munster, believe that Apple shares will hit $350-$400, the consensus seems to be that the stock is overpriced and a correction is overdue.
Fundamentally, Apple made some changes to grow services. There is substance to their bottom line. Profits have been shrinking every quarter, however, as revenues have increased. Apple reported a 3.1% decline in Q4 2019 profits — the fourth consecutive decrease.
Apple’s own marketing abilities have inflated the stock price beyond its value. By some estimates, Apple stock is 59% overvalued. This is the result of carefully managing investor expectations. They set a low bar and exceeded it.
Although products such as the iPhone 11 and AirPods are massively successful, the company still faces declining profitability. They’ve been able to grow services, however, it hasn’t been enough to make up for declining iPhone sales.
The Case for Apple Optimism
Apple stock may be overvalued, however, revenues and profits could grow enough to eventually justify the stock price. The bottom line is that Apple has 1.5 billion users. All of them need to upgrade devices and many of them want to buy Apple’s newest devices. Apple can tap into this massive user base with monthly subscriptions, which should stabilize revenues between iPhone upgrade cycles.
Apple investors should be cautious and follow the news closely. Trade wars, recessions and other global and domestic factors can influence Apple’s stock price. At this point, however, with so many users, Apple is here to stay.