Like most U.S. stocks of late, Apple isn’t doing great, but it’s doing better than other Big Tech companies due to myriad reasons.
Jeran Wittenstein for Bloomberg Businessweek:
As of Dec. 16, Apple is vastly outperforming other tech giants, whose shares have cratered this year. While Apple has declined 24%, Meta Platforms Inc. has lost 64% of its value and Amazon.com Inc. is down 47%.
The explanation for Apple’s performance begins with its immense profits… In the past five years, the company has generated $454 billion in cash from operations. Rather than plow those profits into acquisitions of marquee companies, Apple has returned all that cash—and then some—to shareholders in the form of stock buybacks and dividends. That’s more than the market value of Exxon Mobil Corp. or JPMorgan Chase & Co.
Expectations for Apple’s future profits also help explain its relatively strong stock. Although 2023 earnings estimates for the tech sector have been dropping, Wall Street analysts project a 2% increase in Apple’s profit. Combined earnings for tech companies in the S&P 500 are expected to fall almost 2%, according to Bloomberg Intelligence.
Apple’s loyal customer base is also a factor. There are more than a billion iPhone devices in use, with many customers owning other products in the Apple family including iPads, Mac computers and watches. When combined with an increasing number of services, such as cloud storage and apps tied to those devices, Apple has what’s known as a “sticky” platform… Apple has also benefited from expectations that its affluent customers are in a better position to continue paying for its products even during a recession…
“They have a monopoly on 15% of the world’s richest population,” [Sameer Bhasin, a principal at Value Point Capital], says. “In this market where you have a lock on that customer base, I don’t know what other company has that.”
MacDailyNews Take: In other words:
Newsflash: Apple sells premium products at premium prices to premium customers.
Apple iPhone customers are the most recession-proof smartphone buyers. — MacDailyNews, September 7, 2022
The most inflation- and recession-resistant big tech company is Apple, thanks to its superior customer demographics. – MacDailyNews, October 27, 2022
The same goes for Mac, iPad, Apple Watch, and Apple Services customers in personal computers, tablet computers, smartwatches, and subscriptions, respectively. – MacDailyNews, October 13, 2022
The good news is that Apple’s customers are the least affected by inflation and recession. – MacDailyNews, December 15, 2022
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