Apple Stock This Week: Profit Snapshot, Spring Event, Capital Gains Tax, and More


Shattering neighborhood for the iPhone

The iPhone, much like the rest of the Cupertino business, will face some easy comparisons this time around – the comparable period of a COVID-19 pandemic in 2020 saw revenues stagnate, the worst figure performance ever. ‘business since early 2019. This is a good start for the second fiscal quarter results.

The chart below shows iPhone revenue growth over the past nine quarters. The upward trend is clear and seems to be explained at least in part by the success of the most recent device launches:

  • The iPhone XS and XR fell short of expectations in 2019 (red dot number 1), after the iPhone X of the previous year appeared to have accelerated the upgrade cycle;
  • The iPhone 11 marked a recovery in smartphone sales in 2020 (red dot number 2), but the rebound was quickly crushed by the COVID-19 crisis;
  • The second generation iPhone SE was a successful mid-cycle launch (red dot number 3) that helped boost revenues during the pandemic year, even momentarily;
  • The iPhone 12 captured much of the pent-up demand in the first fiscal year of 2021 (red dot number 4), pulling Apple back to what appears to be a more sustainable recovery path.

Figure 1: iPhone revenue growth since fiscal 2019.

Apple Maven’s point of view

Apple seems to have a great lineup of iPhones, from the well-received 11 to budget SE to high-end 5G models launched late last year.

In the second fiscal quarter, the strong smartphone portfolio will meet a recovering consumer in the United States, many of whom recently received the third wave of fiscal stimulus from the government. It’s hard to imagine that the iPhone doesn’t perform well after the holidays, especially against easy dials.

3 reasons why the spring event matters to Apple Stock

Apple hosted the Spring Loaded event on April 20. The most relevant product upgrade came from the new iPad Pro. Updates on the iMac, services, home, and portable devices were also announced.

# 1 – M1 chip shows its value: The M1 chip and other technological advancements have enabled Apple to narrow the gap between their mainstream products and their professional products. This helps explain, for example, the extinction of the Intel-based iMac Pro.

# 2 – product portfolio looks strong: The iPad Pro, the star of Tuesday’s show, looks improved enough (M1, 5G, ultra-wide camera) to stand out in a year in which Apple’s tablet segment will begin to grow. dealing with difficult compositions in the June quarter. When it comes to the new iMac, there is no doubt about its beauty and power. At a starting price of $ 1,300, I think Apple is making the right decisions by introducing a compelling and relatively affordable desktop PC.

# 3 – Apple is developing its ecosystem: When it comes to the scale of the product refresh, Apple did not disappoint. Along with the new iPad Pro and the new iMac, we’ve also seen AirTags, Apple TV 4K, Apple Card updates, and Apple Podcast. Not all announcements will mean much from a future financial performance perspective. But they all add to Apple’s diverse ecosystem.

Figure 2: Apple's Spring Loaded event logo.

Figure 2: Apple’s Spring Loaded event logo.

Will capital gains tax derail Apple stock?

It hasn’t been a quiet few days for Apple stock. Stocks plunged on Thursday April 22: -1.2% against the S&P 500 and the Nasdaq -0.9%. Apple fizzled out just before the company’s earnings week, after enjoying a 10% rebound in the first half of April. In fact, each of Apple’s daily gains has been followed by a daily loss since April 8, much like a switch.

Apple news of the day

To be fair, Apple-specific news also surfaced on Thursday. For example, the App Store remains center stage, this time due to speculation that the company may “grow its advertising business with a second type of advertising space” within the platform.

But nothing that Apple Maven had planned to move Apple shares on April 22 didn’t matter much compared to the news on the tax front. Bloomberg reported that the Joe Biden administration may introduce legislation to raise the capital gains tax rate to 39.6% for some people, from 20%.

Why it’s important for Apple stocks

Higher capital gains taxes, if approved and implemented, would mean lower after-tax gains for investors overall. Due to the lower return expectations, it is understandable that the broad indices fell, as they did on Thursday.

But Apple stocks and other big tech names could suffer more than the short-term stock average. Apple has seen its stock price rise 240% since 2019, far beating the S&P 500 and the Nasdaq. Many investors who bought the stock in the past 30 months could be sitting on quite a bit of unrealized gains.

AAPL stock market share, January 2019 to April 2021

Figure 3: AAPL share price action, January 2019 to April 2021

Jim Cramer’s warning to Apple stock traders

Jim Cramer thought he had his Apple Watch stolen. While the device appears to have always been in his safe possession, the event resulted in the TheStreet and Mad Money star having a revelation about the allure of the Cupertino company and the Apple stocks themselves. same:

“I have a lot of different apps [on the Apple Watch], I change the wallpaper, I check the mail on it, there is nothing that I cannot do on it. My watch is now part of my routine. I think the “lukewarm” Apple really doesn’t understand what Tim Cook did: create much-needed appendages.

However, what caught my attention the most about the “stolen watch” episode was Jim Cramer’s warning to Apple stock traders:

“If you try to exchange [Apple shares], you do not enter. You can’t be nimble enough to get out and in. You just have to stay inside, and you stay there because Apple makes fantastic products.

The story says: don’t time the entrances

The evidence that helps support the “own, don’t trade Apple stock” argument is outlined below. The histogram shows the monthly distribution of the five-year annualized returns of the Cupertino shares, dating back to the early 1980s.

Here are some interesting observations:

  • in 86% of cases, a 5-year investment in Apple produced positive returns.
  • in 68% of cases, a 5-year investment in Apple produced annual returns greater than 10%.
  • in only 7% of cases, a 5-year investment in Apple produced an annual loss of less than -10%.
Apple distribution of annual returns over 5 years

Figure 4: AAPL – Distribution of annual returns over 5 years.

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(Disclaimers: This is not investment advice. The author may go along with one or more actions mentioned in this report. Additionally, the article may contain affiliate links. These partnerships do not influence editorial content. Please support The Apple Maven)

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