Apple’s slow game on show
The wait for game-changing innovations goes on
Apple keeps showing that its era of game-changing innovations is over, at least for now. The stock fell modestly again on Tuesday, after dipping the day before. The price move belies the apparent importance of a raft of product announcements on Monday, including the iPhone maker’s incursion into Netflix’s streaming video sphere.
A closer look at the launches, which extend the move away from topping-out handset revenues, shows why the market’s underwhelmed.
- The News Plus subscription portal has notable holes, including the New York Times and the Washington Post
- Apple TV Plus is anything but simple and compelling, looking on the surface like a paid version of the existing multi-channel platform. As exclusive content therein gains traction, that may change, but only over time
- The credit card partnership with Goldman Sachs looks most promising. The Federal Reserve this month reported U.S. card debt closed 2018 at a record $870bn. Still, there is little prospect the JV will take much share from dominant U.S. players like JPMorgan, Capital One, BofA and others, even over a decade
For Apple, the true value of these launches is the foothold they create for the longer view. Overall, the roll-outs look very much in the mould of iterative strategies favoured by CEO Tim Cook. They’re the antithesis of the more disruptive innovations that were the signature of Cook’s predecessor, Steve Jobs.
Yet the stock is up 22% so far this year regardless. With recent warnings out of the way and iPhone forecasts ‘right-sized’, Apple’s increasingly diverse revenues and modest forward valuation continue to attract. It is the broader outlook, fogged by the lingering U.S.-China chill and global growth concerns that remain inescapable for huge corporations like Apple.
Right now, although Apple shares are backed by the solid gradient of an ascending 200-week moving average, the approach to a rising trend line that was breached with some drama late last year poses a significant challenge. More convincing news looks required before Apple buyers are prepared to cross it.
Price chart: Apple Inc. DFT – weekly [26th March 2019, 19.30 GMT]
Source: City Index
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.