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Apple Is Changing What It Means to Hold AAPL Stock

AAPL stock

Earlier this week, tech juggernaut Apple Inc. singlehandedly sent the entire stock market reeling when it reported a second-quarter miss in earnings and revenue.

It was the company's first revenue decline in 13 years.

The disappointing reports listed falling iPhone shipments, which are down some 16% year on year, and 26% fewer sales in the massive and, for Apple, critical Chinese market. The strong dollar isn't helping Apple's performance there, either.

It's only the latest victim of the "earnings recession" we're almost certainly enduring right now.

Don't get me wrong: Apple is still a great company and a must-have stock.

But here's the thing... the very nature of what it means to be an Apple shareholder is changing, and the company is in the midst of what I think is a misstep right now.

Here's what I mean...

Apple Stock Price Tanks on Earnings Miss – What Investors Should Do Now

Apple stock price

The Apple stock price has been hammered following an uncharacteristically bad earnings report.

Apple Inc.'s fiscal Q2 earnings were not only much lower than the same period a year ago, but missed Wall Street expectations as well.

The AAPL stock price was down as much as 8% in after-hours trading. But the sharp sell-off was an overreaction.

Here's why Apple stock is a great bargain right now...

Where the Apple Stock Price Is Headed in 2016

Despite Apple stock slipping in early 2016, it remains one of the best stocks on the market today to buy and hold long term.

Apple stock dipped below $100 per share in early 2016 along with the broader markets. Through the first month of the year, the Apple stock price dropped 8.4%, while the Dow Jones dipped 5.6%. It has since rebounded, and has flat year-to-date returns.

But Money Morning experts see Apple Inc. (Nasdaq: AAPL) stock as a solid long-term investment.

Before we get into the reasons why AAPL stock will be so profitable, let's look at why the Apple stock price has dipped in 2016…

Why the Apple Stock Price Fell Below $100

In early January, the AAPL stock price fell following a negative report about iPhone sales.

Apple stock forecastReports of slowing iPhone sales started in November, but hit with more frequency throughout December and January. Most cited data from Apple suppliers indicating a slowdown in iPhone production.

Analysts have taken this data and lowered their iPhone forecasts dramatically. Several such as Morgan Stanley and Credit Suisse are now projecting that 2016 iPhone sales will actually decline year over year – a much worse prospect than slowing growth.

Then the financial media piled on, with pundits declaring that we've reached "peak iPhone."

Following the weak iPhone report, the Apple earnings report for Q4 also disappointed investors.

On Jan. 26, Apple reported earnings of $3.28 a share. That topped forecasts for $3.23 a share, but was an increase of just 1.9% from the same quarter a year ago. Still, the $18.4 billion in profit was the most by any company in history.

Revenue rose just 1.7% to $75.87 billion, which fell short of the consensus estimates for sales of $76.6 billion.

Apple sold 74.77 million iPhones in the quarter as well. The product that accounts for two-thirds of those sales. The increase of less than 1% year over year missed forecasts for sales of 76.54 million iPhones.

But despite the reports of slowing iPhone sales and uninspired earnings, Money Morning experts are still bullish on the AAPL stock price in the long term.

"If you're looking at the long haul, Apple is still a stock to own," Money Morning Defense & Tech Specialist Michael A. Robinson said on FOX Business in January.

Here are three reasons to remain bullish on Apple stock today…

iPhone Sales Won't Hurt Apple Stock Like Many Predict

iPhone growth has slowed, but this slip in growth is likely only temporary. Apple's global smartphone market share generally hovers around just 15%, meaning it can keep chipping away at Android's dominant share of 80%-plus.

Apple also has untapped potential in China. As Tim Cook pointed out in a recent conference call, the Chinese middle class is expected to grow from 50 million in 2010 to 500 million in 2020, and many of them will want iPhones.

Over in India, which is the next major growth market for smartphones, Apple has been busy laying the groundwork for the iPhone. It has plans to open more stores there in the next year or so, and sales have already started to accelerate.

Apple sold 800,000 iPhones in India in the December quarter, and 1.7 million for calendar year 2015. That December quarter figure represents year-over-year growth of 60%.

Then there's Apple's thriving ecosystem, which is stronger than ever…

What the "Ecosystem" Means for the AAPL Stock Price

Apple's services includes iTunes, iCloud, the App Store, and Apple Pay. And these are all part of the Apple "Ecosystem." In the last earnings report, Apple said revenue from that segment was up 23% in 2015.

The Apple profit machine ultimately runs on the fuel of its ecosystem – the glue that ties all those elements together and keeps customers loyal to the Apple brand.

Here's a full rundown of Apple ecosystem products:

  • The Mac
  • The iPad
  • The Apple Watch
  • Apple Pay
  • Apple TV

"A billion devices connected to Apple's services just in the last 90 days. That's enormous – $5 billion in service revenue," Robinson said. "They have a built-in customer base second to none in technology and really in the world in any kind of a consumer format."

Of course, many critics say Apple needs to produce another game-changing product like the iPod/iTunes tandem or the iPhone.

The notoriously secretive Apple probably has such a project in the pipeline. It could be the much-rumored Apple Car, or the definitive virtual reality platform. But Apple knows only too well that it needs to continue innovating.

Apple may not necessarily build a car, but could create self-driving technology to sell to automakers. Whatever Apple is doing in the auto space, we won't see it in 2016 – or 2017, for that matter.

So the company is not relying on iPhone sales alone. And the ecosystem will continue to have a major impact on the Apple stock price for years to come.

And the third reason we're bullish on the Apple stock price for the long-term is the future unveiling of the iPhone 7.

What iPhone 7 Means for Apple Stock in 2016

The iPhone 7 – expected to launch in September 2016 – is bound to have at least one extremely tempting new marquee feature.

One rumor already circulating is the possibility of a nearly unbreakable sapphire screen. Another is that the new iPhone will be waterproof. We could see both.

Apple uses both technologies in the Apple Watch, so that's not out of the question.

Durability is a big issue for all smartphone users. A nearly indestructible iPhone 7 would give both sales and the Apple stock a huge jolt.

Another positive long-range factor will be the new iPhone subscription plan, which allows users to upgrade to the latest iPhone each year. We won't see the impact of that until Q1 2017.

Either way, the unveiling of a new iPhone will have a huge boost on Apple's sales. And it will be a major catalyst for the Apple stock price into 2017.

So where exactly do we see the Apple stock price heading? Here's Robinson's Apple stock price prediction…

Apple Stock Price Prediction for 2016 and Beyond

The first question is whether Apple stock will keep falling in 2016 before it rebounds. Can it get cheaper?

Yes, maybe a little. Given its negative momentum right now, AAPL stock could easily sink to about $85, but probably no lower. It's notoriously hard to time these things, so investors considering whether to buy AAPL stock shouldn't wait too long.

After that, look for Apple stock to recover.

Robinson has an Apple stock price target of $130 by Labor Day 2017. Robinson's $130 target is about 35% higher than where AAPL stock is trading now. And he's not alone in believing that Apple stock will right itself. Even after several Wall Street analysts lowered their Apple stock price targets as well, the consensus is still about $138.

Stay tuned to Money Morning for everything you need to know about Apple stock in 2016 and beyond…

Where the Apple Stock Price Is Headed in 2016

Despite Apple stock slipping in early 2016, it remains one of the best stocks on the market today to buy and hold long term. Apple stock dipped below $100 per share in early 2016 along with the broader markets. Through the first month of the year, the Apple stock price dropped 8.4%, while the Dow […]

Read More…

Is Apple Stock a Buy One Year After the Debut of the Watch?

Apple Stock

Whether Apple stock is a buy on the one-year anniversary of the Apple Watch launch has not been made easier to answer by a lot of speculative news stories.

Many analysts and pundits have declared the Apple Watch a "flop" because they're guessing that the newest Apple device has failed to meet expectations.

Here's why investors need to take these stories with a big grain of salt - and what they should be looking at instead...

Why AAPL Stock Is a Buy After "Snoozer" Event

AAPL stock

AAPL stock has reacted to Monday's Apple Event news pretty much like the tech media did - with a big yawn.

But most people have completely missed the significance of what Apple is doing.

That reading of the debut of the iPhone 5SE greatly underestimates Apple's plans. It's part of a grand strategy that will boost earnings more than people think.

Here's how...

The 2016 Apple Dividend Increase: What Investors Can Expect

apple dividend

A 2016 Apple dividend increase is pretty much a lock for April.

Apple Inc. (Nasdaq: AAPL) already has committed to raising its dividend. The tech giant has done it three years in a row.

The only question is how big the AAPL dividend increase will be.

We've crunched the numbers, it looks like it will be much higher than most people think...

Why the Apple vs. FBI Fight Is About Much More Than One iPhone

Apple vs. FBI

The Apple vs. FBI fight might seem about one company granting access to the data on one device, but the legal implications of this case go far beyond that.

The FBI is seeking access to the iPhone of one of the San Bernardino attackers, but Apple has resisted. It may look like Apple is simply being stubborn.

But when you dig into the company's thinking, it becomes clear why Apple has decided to fight the government...

Apple Buying Netflix Would Give Investors What They Crave

netflix iphone

Apple buying Netflix would give the tech giant something it's been lacking lately - but absolutely must have to keep investors happy.

While an Apple-Netflix deal would not be cheap, it would pay off for Apple in the long run.

An Apple acquisition of Netflix would address the root cause of why investors have dropped Apple stock more than 20% since November.

This is what Apple has to gain from buying Netflix...

How Apple Stock Will Gain from a New, Smaller iPhone

AAPL stock

While not officially announced, it is widely expected that Apple Inc. (Nasdaq: AAPL) will on March 15 introduce a new 4-inch model of the iPhone - the so-called iPhone 5SE. It sounds like a step backwards.

But here's why this is just the thing Apple needs to recharge iPhone sales growth -- and breathe life back into the AAPL stock price...

Should I Buy Apple Stock After the Q1 Earnings?

buy apple stock

Is it time to buy Apple stock?

With shares of Apple Inc. (Nasdaq: AAPL) down about 28% from last summer's highs, the company is looking more and more like a bargain.

Persistent concerns about slowing iPhone sales and lowered guidance for the current quarter has soured Wall Street on Apple stock.

But this is why it may be time to buy AAPL stock anyway...

This New Apple Stock Price Target Foresees a 35% Gain

Apple Stock

Money Morning Defense & Tech Specialist Michael A. Robinson has lowered his Apple stock price target in the wake of less than stellar earnings yesterday (Tuesday), but nevertheless sees significant gains ahead.

Robinson remains bullish on the stock with an AAPL price target of $130 - about 35% higher than where it currently trades.

Here's why Robinson says Apple "is still a stock to own"...

Q1 Apple Earnings 2016

apple earnings

Wall Street is awaiting the Q1 Apple earnings not to find out about another record-breaking quarter, but to see if their fears about slumping iPhone sales in 2016 will be realized.

Instead of focusing on Apple's numbers for its December quarter (Q1 of Apple's fiscal year), Wall Street will be looking mostly at the company's guidance for Q2.

Here's what they've been saying - and why they're getting it wrong...

Apple Q1 Earnings Will Defy Gloomy Forecasts

Apple q1 earnings

The Apple Q1 earnings, expected after the market close tomorrow (Tuesday), won't blow estimates out of the water, but will be better than Wall Street has predicted.

Concerns over slowing iPhone sales growth has prompted more than a dozen analysts to lower their 12-month price targets over the past two months, dropping Apple stock 18%.

But here's why the analysts are overreacting...

15 Apple Inc. Stock Facts That Will Surprise You

aapl-facts-2

A lot of Apple Inc. stock facts are relatively obscure, despite heavy media coverage of the company.</p.

But Apple Inc. (Nasdaq: AAPL) has been around a relatively long time now - nearly 40 years - and so has had plenty of time to accumulate a storied history.

To help investors better understand the unique nature of this remarkable company, Money Morning has compiled these 15 amazing Apple Inc. stock facts...

Why Is the AAPL Stock Price Falling Today?

aaple stock price

A rocky market and anxiety over iPhone sales have lopped 5% off the AAPL stock price this week, pushing shares below $100.

The Apple stock price has been falling since early November, when worries about iPhone sales started. Investors won't get any clarity on the issue until Jan. 25, when Apple reports earnings.

Until then, here's what you can expect from AAPL stock...