Keeping watch on Apple’s bigger potential

Despite the unveiling of a slew of promising products, Apple’s stock price closed the session lower. Is this a long-term opportunity to get in on the dips? Let’s take a look at what’s exactly in the pipeline for its future.

Apple logo
Source: Bloomberg

Apple Watch

“One more thing,” said Apple CEO Tim Cook, invoking the classic line by Steve Jobs typically used before unveiling a major innovation.

This time, not only is the smartwatch a major milestone for Apple, it also marks the first introduction of a new product category under Cook at the helm.

No doubt, Apple Watch is impressive and sets the bar higher for the industry. Among the key features include the use of a ‘digital crown’ to minimize screen blockage with fingers, as well as and an integration with mobile payments system.

Do consumers really want a smartwatch? No less, one that costs as much and potentially more than their iPhone, which is needed for it to be fully functional?

At this point, there are some lingering doubts Apple can pull off the same revolution it did with smartphones (iPhone), music players (iPod) and tablets (iPad).

In most parts of Asia, at least, handset costs to consumers are typically cushioned by telco subsidies. Can we expect to see the same for the Apple Watch, which currently has an indicative price of at least US$350?

Apple fans will probably have no hesitation getting one, but the rest of the crowd is unlikely to jump on the bandwagon until they see a more compelling price point, or a stronger reason to justify their spend – such as a more independent smartwatch with 3G/4G connectivity.

Apple.Inc Chart
Click to enlarge

Late to the Phablet party

As widely expected, Apple relented and joined the Phablet bandwagon. Are they late to the party? Yes, but fortunately it looks like the party’s still got some way to go.

There’s still a strong demand by consumers for large screen phones. Handsets with screens larger than five inches accounted for around 40% of global smartphone shipments in Q2 2014. This was nearly double from the previous year, according to data from Canalys.

Better products, but more headwinds

An entry into wearables gives Apple potentially new revenue streams, such as apps for the smartwatch, possibly further monetization from mobile ads and data analytics.

The Apple ecosystem gets even more robust, which will help lock in consumers, especially in a time when consumers are changing their handsets at a faster pace.

However, we’re seeing increased headwinds for Apple. Notably, in one of its key markets China, telcos are reportedly cutting back handset subsidies to the tune of nearly US$5 billion. This will be bad news for higher end handset makers, but good news for lower cost rivals such as Xiaomi, which has leapfrogged Apple to take the market share lead.

The competition is getting more cutthroat. The week before Apple’s announcement saw a slew of product launches from the likes of Huawei, Samsung and Sony. There were also some pre-emptive moves, such as from Amazon which cut the price of its new phone from $200 to $0.99 in the US.

Apple share prices overcooked?

On the launch, Apple’s stock price dipped 0.38% to close at $97.99.

This reflects the ‘buy on the rumour, sell on the news’ effect that we’ve seen in its past product launches over the years.

Some investors have started to take profit after the decent rally over the year, which has lifted Apple’s stock price up over 22% year-to-date.

Does it still have legs to run up? In the interim, it looks like there is some bearish sentiment over the stock. However, on a long-term view, the stock looks like it’s on an uptrend, so investors can consider entering on the dips.

More conservative investors can wait for a pull back toward the support around $93. They can also wait for more confirmation signals from MACD to cross above its signal line and for the stock price to return above its 20 DMA.

Apple.Inc Chart
Click to enlarge

Denne informasjonen er utarbeidet av IG, forretningsnavnet til IG Markets Limited. I tillegg til disclaimeren nedenfor, inneholder ikke denne siden oversikt over kurser, eller tilbud om, eller oppfordring til, en transaksjon i noe finansielt instrument. IG påtar seg intet ansvar for handlinger basert på disse kommentarene og for eventuelle konsekvenser som et resultat av dette. Ingen garanti gis for nøyaktigheten eller fullstendigheten av denne informasjonen. Personer som handler ut i fra denne informasjonen gjør det på egen risiko. Forskning gitt her tar ikke hensyn til spesifikke investeringsmål, finansiell situasjon og behov som angår den enkelte person som mottar dette. Denne informasjonen er ikke utarbeidet i samsvar med regelverket for investeringsanalyser, så derfor er denne informasjonen ansett å være markedsføringsmateriale. Selv om vi ikke er hindret i å handle i forkant av våre anbefalinger, ønsker vi ikke å dra nytte av dem før de blir levert til våre kunder. Se fullstendig disclaimer og kvartalsvis oppsummering.

Finn artikler av analytikere

Denne informasjonen er utarbeidet av IG, forretningsnavnet til IG Markets Limited. I tillegg til disclaimeren nedenfor, inneholder ikke denne siden oversikt over kurser, eller tilbud om, eller oppfordring til, en transaksjon i noe finansielt instrument. IG påtar seg intet ansvar for handlinger basert på disse kommentarene og for eventuelle konsekvenser som et resultat av dette. Ingen garanti gis for nøyaktigheten eller fullstendigheten av denne informasjonen. Personer som handler ut i fra denne informasjonen gjør det på egen risiko. Forskning gitt her tar ikke hensyn til spesifikke investeringsmål, finansiell situasjon og behov som angår den enkelte person som mottar dette. Det er ikke utarbeidet i samsvar med lovens krav for å fremme uavhengighet av investeringsanalyse og som sådan er ansett av å være markedsføringskommunikasjon. Selv om vi ikke er hindret i å handle i forkant av våre anbefalinger, ønsker vi ikke å dra nytte av dem før de blir levert til våre kunder.