Best Time and Reason to Buy Apple Stock

  Best Time and Reason to Buy Apple Stock   The biggest catalyst for stock will be the success of Apple's product line in the 5G smartphone era. The massive surge in iPhone revenue, the tech giant's largest product line, was one of the reasons that triggered Apple's (AAPL (NASDAQ) $146,70 +0,34 (+%0,23)  blockbuster third-quarter financial results. The smartphone giant announced iPhone revenue of $39,6 billion last quarter, an increase of 50% compared to the previous year. Another interesting thing to note here is that Apple achieved this impressive growth in iPhone revenue despite a smaller increase in shipments. Let's examine Apple's success and why it bodes well for the company's future.

Apple is flexing its pricing power with a stronger 5G iPhone mix.

While Apple no longer discloses how many iPhones it sells each quarter, IDC estimates the company sold 44,2 million units this quarter. This figure shows that shipments have increased by 17.8% year over year. In fact, it makes it clear that the company generated more revenue per unit sold last quarter. So, assuming IDC's estimates are correct, Apple's iPhone ASP reveals an impressive 27,5% year-over-year increase. Investors should keep in mind that Apple did not offer any 5G iPhones in the June quarter of last year. So the huge increase in ASP can be attributed to the launch of the iPhone 12.

Best Time and Reason to Buy Apple Stock

In addition, Apple's iPhone ASP has also increased sequentially. It shows that consumers are more likely to prefer the 5G-equipped iPhone 12 or iPhone XR models over lower-priced options like the iPhone 11 (starting at $599) or the iPhone 11.

Why is this of great importance?

It is important to note that the 5G smartphone market is still in its early stages of growth. IDC estimates that smartphone shipments could account for 69% by 2025. Annual shipments of 5G smartphones are expected to exceed 1 billion units by 2025, compared to an estimated 540 million units this year. Apple continues to move forward to take advantage of this great opportunity. And finally, Apple has a large installed base of existing users who have not yet upgraded to a 5G device. Given its iPhone installed base, there are still hundreds of millions of users that Apple can still sell 5G smartphones to. All this data shows that it has a terrific opportunity to increase both revenue and margins. As such, investors who want to add 5G shares to their portfolios should show more interest in Apple.  

Source: The Motley Fool

 

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