On Aug. 2, 2018, Apple [AAPL] created history as it became the first company in the United States to be valued at $1T as per market cap. Apple’s market cap rose to a high of $1.10T and has since slipped to its current valuation of $996.3B.
Despite the recent slide, Apple shares are up 25.5% in 2018. Now that it has crushed the $1T barrier, what’s next for the tech heavyweight? What will be the next revenue driver for Apple? Can the company be valued at $2T? Analysts definitely think so.
iPhone growth might slow down
Apple’s stock was trading at $13 in Nov. 2008. The stock has since risen 1500% driven by the launch of Apple’s flagship product the iPhone as well as the hugely successful iPad. The global exponential growth in the smartphone industry created robust demand for what soon became Apple’s flagship product.
Now, this growth has stalled. The smartphone market is a mature one. Emerging markets like India will drive demand but the iPhone is too expensive for these markets. The iPhone has lost market share to Chinese companies such as Huawei, OPPO and Xiaomi.
Apple’s iPhone still accounts for over 59% of total revenue. In the recent earnings call, Apple CEO Tim Cook stated that the company will no longer publish device sales going forward. Is this an indicator of slowing demand?
Apple though remains an innovative company and allocates significant resources to research and development. It has time and again proved critics wrong especially over the last decade. Apple still remains a good long-term bet for investors. Let’s see why.
Apple’s Services business critical for the company
Apple’s Services business has been a major revenue driver for the company over the last several quarters. It accounted for 16% of total revenue in the last quarter and is as big as a Fortune 100 company in terms of revenue.
This business includes revenue from Internet services, AppleCare, Apple Pay, licensing and other services. The App Store, Apple Music and Apple Pay are all set to experience significant growth over the next few years.
Apple Music has already become the second largest music streaming platform in the United States, while the App Store generated 93% more revenue than the Google Play Store [GOOG] in the last quarter that has a far larger user base.
Apple has created a technological ecosystem with a high customer satisfaction and retention rate.
Apple Car rumored to launch by 2023
Noted Apple analyst Ming-Chi Kuo expects the company to launch the Apple Car by 2023 that will push it towards the next trillion dollar valuation. Kuo stated that Apple’s high growth services segment, AR futures, and its secretive car project (also known as Project Titan) will propel it towards a $2 trillion valuation.
This means Apple is looking to take advantage of the tectonic shift in the global automotive market. Several countries are already eyeing investments in the electric/hybrid car space as they are running out of options to combat global warming and climate change. The electric car is a terrific alternative and companies are now pumping money into this space.
Kuo stated, “Apple’s leading technology advantages (e.g. AR) would redefine cars and differentiate Apple Car from peers’ products. Apple can do a better integration of hardware, software, and service than current competitors in the consumer electronics sector and potential competitors in the auto sector.”
The $2T valuation seems like a distant dream for investors, especially in a difficult macro environment with trade wars, slowing demand, and rising interest rates. Apple though has always been able to catch the consumer’s attention with its high-end tech products and services. If the Apple Car experiences a successful launch, there will be no stopping this stock given the total available market.
VIDEO: How Far Does $150K A Year Get You In New York City?
No matter what metric or list you look at, it goes without saying: New York City is one of the most expensive places in the world to live in.
In this video, CNBC spoke to a Millennial who runs her own brand consulting agency and wants to #WealthHACK her way to retirement by 40.
She makes $150K a year. But how far does that actually get her? Check it out.
How to Create A Financial Roadmap: Investing In A Volatile Market
The market has been heading up, up and away for so long that many investors may not remember (or even experienced in some cases) what it was like to invest during times of extreme volatility. However, the bull market has to end sometime—and probably for longer than a single quarter like we saw at the end of last year.
So how do you go about making investment decisions when it becomes very challenging to find positive returns? It can be tempting to switch out your entire portfolio when there’s a sudden change, but that may not be the wisest move. Before making any changes, you should consult your financial roadmap, and if you don’t have one, then now is an excellent time to make one. The Securities and Exchange Commission advises investors to look at their entire financial picture before making any big changes. This step-by-step guide will help you get everything down on paper.
#1. Set goals
To start creating your financial roadmap, write down any goals that you have. Perhaps you want to purchase a new home in 10 years. You’ll also want to determine when you want to retire, although this age could change over time if you discover that you can’t retire as early as you want to. Decide what types of things you want to save money for, whether it’s a new home or car, an education, retirement, medical bills, a “rainy day” fund, or anything else.
Don’t forget to set timelines for each goal so you have an idea of when you might be able to achieve these goals realistically. The SEC has a number of calculators and other financial tools to help you set realistic timelines for your goals.
#2. Look at your current financial picture.
Most investors already know the basics, but pulling everything together into a roadmap might seem a bit overwhelming because it can be so easy to forget something. Even though you may think you know everything you need to know about your current financial picture, just having all of it down on paper will help you get organized.
Make a list of all your liabilities and assets, including individual holdings in your portfolio[s]. List all your checking and savings accounts and their balances, the cash value of your life insurance policies, real estate, home, retirement accounts and other investments, and any personal property. Knowing which stocks or other assets you have money in can make it easier to decide where you want to move your money when the market turns.
On the liability side, list your mortgage, credit card and bank loan balances, car loans, student loans, and any other liabilities. Add up your assets and liabilities and subtract your liabilities from your assets to see your net worth. If you have a negative net worth, you can start making plans to get on track. The Foundation for Financial Planning has some excellent worksheets to help you get started with making your lists so you don’t forget anything.
#3. Consider your risk tolerance before making any changes.
After you’ve made a list of all your investments and assets, it’s time to think about your risk tolerance. As the winds of the market shift around, risk sentiment will move as well. There is no such thing as an investment that is 100% safe.
A good guideline for determining the best mix of risk in your investments is to subtract your age from 120 and put that percentage of your portfolio in stocks and the other percent in bonds. For example, a 40-year-old would put 80% of their portfolio in stocks and the remaining 20% in bonds.
Of course, there are many other asset classes to consider too, and picking stocks is literally a full-time job. Thus, you may want to consider an index fund for your stock holdings if you just want to set it and forget it. However, if you want to take on a bit more risk in part of your portfolio, there are many actively managed funds with excellent track records to take the guesswork out of stock picking.
As you’re setting out all your investments and thinking about making changes, make sure your portfolio is properly diversified so that when one asset falls, another one gains to make up for the loss in the other one. Think over every potential change carefully before making a move to avoid unnecessary turnover and fees associated with trading.
The SEC also has a handy guide here which explains more about investing and creating a financial roadmap.
CNBC: Here’s Why WeWork Wants To Go Public
News broke recently that WeWork’s going public in September. In this video, CNBC breaks down why they’re going public.
Before you watch, though, here’s some context.
WeWork’s recent S-1 filing — the paperwork you file with the SEC right before you go public — had the entire internet up in arms, including ourselves, trying to decode how the heck WeWork justifies its insane valuation.
Considering, ya know, IWG, a direct competitor, has nearly double the revenue, five times the members, is $2.5B ahead on the bottom line and…well, you can sort of see where this is going.
Despite earning an insane $47B valuation this year, it’s bleeding dough. Yes, WeWork grossed $1.8B in 2018…but it also lost $1.9B.
Be that as it may, WeWork is going public this year (via parent company “The We Company”), the latest in a string of high-profile tech IPOs in 2019.
And speaking of tech. Despite numerous “tech” mentions in the S-1, critics are claiming WeWork is little more than a real estate company.
As far as the We losses go, CFO Artie Minson told CNBC that investors need not worry about those grim financials, but instead to look at WeWork’s losses as “investments” that will lead to greater cash flow. (Which is very possible.)
And even if short-term losses eventually unearth long-term cash flows, will they be enough to justify its lofty valuation…and even loftier ambitions?
While we’re waiting for time to tell on WeWork’s future, if you’re looking to raise your startup game right now, go check out our content partner More Labs’ brand-new drink Aqua+. (Yes, the same More Labs behind this drink that broke the internet.)