Apple began 2019 with a pessimistic outlook. Pivoting into services, along with strong device sales, the company is finishing off the year with a record stock price.
By Chand Bellur
December 26, 2019 at 9:58 p.m. PDT
Apple Stock at All Time High
Apple finished off the year with an all time high and one of their biggest rallies ever. The latest stock surge is outdone only by their 2009 rally, where the iPhone maker saw an almost 150% gain. Currently, Apple stock is priced just below $290 — an 82% gain for the year.
This outcome is surprising to many investors. At the beginning of the year, Apple’s stock took a beating. Fears over a looming trade war and doubts about a post-iPhone Apple caused the stock to drop below $180 per share.
Services Credited for Apple’s Renewed Success
Apple’s renewed success is no accident. Over-reliant on the iPhone, strategies for diversification have supplanted the simpler model of just selling devices. Services are at the core of Apple’s push to increase revenues as iPhone sales level off.
In 2019, Apple launched three new subscription services — Apple Arcade, Apple News+ and Apple TV+. The new services add to Apple’s other non-device revenue streams, such as Apple Music, the App Store, Apple Books and the iTunes Store.
Apple’s new services proved to be tremendously successful. Apple reported that services accounted for $12.5 billion in fourth quarter revenues. This is a record for the company, boosting investor confidence.
Services aren’t the only thing going for Apple. The company renewed faith amongst customers and critics alike that they can still innovate by creating industry leading devices.
iPhone 11 and AirPods in High Demand
Although the iPhone 11 offers small, incremental changes over predecessors, its affordable price persuades customers to upgrade. Everything about the new iPhone was predictable, except for its price. Starting at only $699 for the 64GB model, it’s one of the cheapest, yet most capable, iPhones ever made.
If a new, affordable iPhone wasn’t enough, Apple is once again dominating the wearables market with their tremendously successful AirPods. The new AirPods Pro offer peerless noise cancellation and an innovative audio transparency safety feature. Once again, it’s proving difficult to find AirPods and customers are forced to wait weeks for the popular wireless earbuds.
These two new devices, in particular, are in high demand this holiday season. The success of these items contributes to Apple’s massive stock gains.
Apple Stock Forecast to Reach $325 to $350
Given the success of their pivot into services and ability to create desirable devices, Apple’s stock is expected to grow even more. Analysts believe that the next iPhone will feature 5G networking, which will drive yet another massive upgrade cycle. This has caused some Apple experts to issue price targets of up to $350 per share.
While it’s possible that Apple stock may reach astronomical heights, market corrections and global economic conditions could reset expectations. Investors may also choose to cash in on Apple stock, which could cause a run on the bank effect. As stock sales drive prices lower, other investors may sell.
Regardless of these psychological fluctuations in stock price, Apple has solid fundamentals. Consumers love their devices and they’ve dominated the wearables market. As their services become more popular, Apple has more room to grow revenues, particularly internationally.