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18/10/2021

Apple Stock: How to invest ?

Apple is undoubtedly one of the best-known global companies. Its popularity stems from its innovative nature and from the high quality of its products compared to those of its competitors. All this makes it one of the most profitable companies in recent years. The evolution of Apple's share price from 2019 to now is a clear proof of this. In fact, since 2019, the company's stock has recorded an increase of over 240%.

If you want to invest in Apple (AAPL) stock and benefit from the company’s success, read our article to find out all  you need to know about this asset. You’ll also discover important information about Apple’s business activities.

The History of Apple

The Apple story began in 1976 when Steve Jobs and some friends worked on computer components to develop the first PC (or personal computer). Apple Computer Inc. was not founded until 1977. Two years later, the company launched Viscalc, a calculation automation tool to be used with an Apple II computer.

The Apple II became increasingly successful, with more than 1,3 million copies sold at the beginning of the 80s, unlike its little brother, the Apple III, which had only limited success due to hardware problems.

Apple Computer Inc. went public in 1980, but the company went through several rough patches over the following years, including:

  • Steve Jobs' departure from 1985 to 1996 in order to start NEXT, his own company 
  • The launch of the Macintosh and other less successful products
  • Strong competition

The impact was such that the company's losses amounted to $740 million in 1996.

However, things changed with the return of Steve Jobs and a partnership with the software giant Microsoft. This led to the launch of several successful products, including the iMac, the first digital tablets (1993) and the iPod (2001).

In 2007, Apple Computer Inc. changed its name to Apple Inc. and entered the mobile market with the iPhone.

Apple's business activities

Today, Apple derives its revenue from multiple business segments. Here's the 2020 data:

  • Sales of its popular smartphone, the iPhone, account for 50.19% of company revenue. It generated more than $137.78 billion in 2020.
  • Apple services, meanwhile, account for 19.58 percent, or $53.77 billion. These services include the Apple TV App, the Apple TV set-top box, Apple Originals, Apple Music, iTunes and App Store.
  • Computer (laptops and desktops) sales account for 10.43%, or the equivalent of $28.62 billion.
  • iPad sales account for 8.6 percent, or $23.72 billion.
  • Other Apple products account for 11.15 percent of revenue, or $30.62 billion. These include the Apple Watch, HomePod, iPod and Airpods, Mac mini and various accessories (such as keyboards, mouses and display screens.).

Introduction and quotation of the Apple share

The Apple brand went public in 1980. From 2006 to today, Apple's share price has increased 43 times. Here is the evolution of its share price since the year of its IPO :

  • +819% from January 2006 to mid-September 2012
  • -43% from mid-September 2012 to the end of June 2013
  • +134% from end of June 2013 to mid-May 2015
  • -32% from mid-May 2015 to mid-May 2016
  • +149% from mid-May 2016 to end of September 2018
  • -34% from end of September 2018 to end of December 2018
  • +119% from end of December 2018 to mid-February 2020
  • -29% from mid-February 2020 to mid-March 2020
  • +101% from mid-March 2020 to present

If you look closely, you can see that after every drop, Apple's stock always rises by at least 70%.

Factors that can influence Apple's share price

Apple is a company with great potential, but is it really worth investing in it? It is impossible to give a firm and definitive answer since we still don't know what will happen to the company in the near future.

However, an overview of the company's strengths and weaknesses gives an idea of the factors that could influence its share price.

Apple's advantages and what drives share prices up

Apple's main advantages are :

  • The Apple Group is one of the largest in the world. The company currently employs over 100,000 people. In addition, its customer base is both loyal and large.
  • Another advantage of Apple is the large budget it allocates to research and development. This has allowed the company to come up with products that are innovative and superior to those of its competitors.
  • Finally, the last strong point of this brand is a well thought-out communication strategy supported by a very strong distribution network.

All this makes Apple today :

  • The world's largest market capitalization with $1,972 billion in October 2020.
  • A company with strong long-term revenue and earnings growth.

The disadvantages of Apple

Apple has several major weaknesses :

  • The brand has little B2B uptake due to the high price of its products ;
  • Some of the brand's products are not very scalable. For example, many video games and consumer PC software are incompatible with Mac products.
  • Finally, Apple's marketing strategy lacks flexibility. Apple products can only be used with other Apple products and applications, which can frustrate users.

Apple's main competitors

Apple has very serious competitors in every segment of its business :

  • Application development and sales. The brand's only serious competitor in this area is the Lydia Group.
  • Tablet manufacturing and sales : Samsung, Toshiba, Motorola, Acer, Archos, HP and Microsoft.
  • Competition in the smartphone manufacturing and sales segment is also fierce. Samsung is Apple’s main competitor because it produces smartphones with features very similar to those of the iPhone.
  • Computer marketing : Apple competes with big names such as HP, Sony, Acer, Asus and Lenovo and particularly with the Windows operating system;
  • Apple doesn't really have any serious competitors in the music segment. But Sony, Philips and Samsung have been trying to increase their presence in this market for some time. 

Revenues and breakdown

Apple's revenue has increased 2.5 times in 10 years, passing the $274 billion mark in 2020. Here is the breakdown by location:

  • U.S. Continent : 45.37% ($124.56 billion)
  • Europe : 25% (68.64 billion)
  • China : 14.68% (40.31 billion)
  • Japan : 7.80% (21.42 billion)
  • Rest of Asia/Pacific : 7.14% (19.59 billion)

As for the brand's profits, they have also followed the upward trend in sales, increasing 2.2 times from 2011 to 2020. 

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