Apple Inc. (NASDAQ: AAPL) is having a rough day in the market along with the rest of the technology industry. While this may be scaring some away, the declines are presenting a buying opportunity for others. Today, we’ll talk about APPL from both the bullish and bearish sides of the equation.
The Bearish Side Of The AAPL Argument
There’s no denying the fact that the bears have a very valid argument when it comes to Apple. At the end of the day, it all boils down to the single largest risk factor for the company, the iPhone. At the moment, the iPhone represents about 80% of the company’s profits. However, the product likely won’t continue to sell at exorbitant rates. Ultimately, there are a few reasons for this….
- Price – First and foremost, a big issue for AAPL when it comes to the iPhone is price. While the company offers a premium brand, demanding a premium price, the iPhone is one of the highest priced phones on the market today. While this flew years ago when the company’s technology was like nothing else on the market, today, it’s a major issue. Not to mention, the company plans on increasing its price for the next iPhone release, the iPhone 8.
- The Competition – Another reason the bears are bears is that the landscape in the smartphone industry is changing in a big way. AAPL is no longer the only source of top of the line technology in smartphone handsets. Samsung has been climbing up the ladder, and there are plenty of other options that have the ability to do most of what the iPhone does.
- Lack Of Innovation – Finally, the bears argue that Apple’s claim to fame was innovation. However, the company seems to be lacking in this area over the past couple of years. As a result, competition is getting closer or even surpassing the company with regard to innovative strategy.
The Bullish Argument On Apple
While there’s no doubt that the bearish argument is a valid one, there’s also a strong argument on the bullish side. Here’s what the bulls have to say…
- CPU Performance – Many of the bulls point toward Apple’s CPU performance as a reason the iPhone, as well as other products will continue to perform. Apple’s newest generation iPhone will widen their leadership when it comes to CPU performance, and the bulls argue that this will likely lead to stronger sales.
- Other Products – The bulls also point to products outside of the iPhone as a reason to expect gains in the value of the stock. Products like the Apple Watch, EarPods and new HomePods. While no single product in this list is a flagship product by any means, the bulls argue that over time, these products will add up to become meaningful revenue generators for AAPL.
- Augmented Reality – Finally, with the introduction of iOS 11, Apple will be bringing augmented reality to their ecosystem with what is known as ARKit. Many believe that this is going to be a game changer as it will allow for immediate development of an entirely new class of apps. Ultimately, the bulls argue that Android will have difficulty matching these app offerings for years to come.
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At the end of the day, AAPL is a stock that really could go either way. While many believe that the stock is going to fall ahead as competition in the industry makes the offering of the iPhone less appealing, others believe that AAPL will do just fine thanks to augmented reality and strong CPU performance. Nonetheless, only time will tell where the stock is headed.
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