Sean Bryant
·4 min read
Since it was founded in the 1970s, Apple has grown into a multinational and widely successful technology company. Best known for its iPhones, the company is also a popular choice for laptops, tablets, headphones and other products.
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Based on its past success, you might assume that Apple shares will continue to increase in the years to come. However, it’s important to remember that past success doesn’t always indicate future results. Here’s a look at Apple’s past, and some predictions as to what could drive the stock over the next five years.
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Apple’s History
Apple went public on December 12th, 1980, with a share price of $22. Since then, the company’s stock has split five times. On a split-adjusted basis, the IPO price was only $0.10.
Earlier this month, Apple reported positive results (revenue and earnings) from the December quarter but warned investors that they should expect some weakness. The biggest negative came when they announced revenue in China had declined 13% during the quarter due to increased handset competition. This caused the stock price to drop nearly 4%.
The past decade has been good overall for Apple investors. They’ve watched the stock price go from roughly $18 per share all the way to its all-time high of $197.86 on December 13, 2023. It’s pulled back to $180.10 (as of February 29, 2024), but long-term shareholders are profiting from their patience.
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Apple’s Appeal
It’s no secret that Apple has a loyal brand following. Those who choose iPhones or Macbooks typically don’t veer off-course. It’s that brand loyalty that’s continued to boost revenue growth in recent years.
Plus, with Apple’s heavy investment in new entertainment content, more and more people are moving to things like Apple Music and Apple TV.
“We’re bullish on Apple’s prospects for the next five years, especially with the iPhone potentially gaining ground against Android as the global economy trends toward higher incomes,” said Deiya Pernas, Chartered Financial Analyst (CFA) and co-founder of Pernas Research. “We foresee Apple slightly outpacing global GDP growth over the next three to five years.”
Predicting Future Apple Shares
Nearly half of Apple’s revenue is made up from iPhone sales. However, if you look at the flat sales numbers over recent quarters, it might be safe to say that the company’s high growth period has passed.
This is mostly because iPhones already make up a large percentage of the world’s cell phones, and people aren’t upgrading nearly as often as they used to.
So where can investors look for continued revenue growth? Services and wearables.
One of Apple’s biggest bright spots has been its services unit which makes up app sales and digital content. In the final three months of 2023, Apple reported a record $23.1 billion in revenue from the unit. This alone accounts for nearly one-third of Apple’s gross profits.
While it’s tough to tell what might happen in the future, there should be some caution. Similar to saturation within the number of iPhones in the market, there will also be a limit on how much the average consumer is willing to spend on digital content. However, for today, services can be what the company needs to continue driving growth.
“If Apple fails to keep up with innovation on their platform, like not advancing in AI to tailor experiences for iPhone users or not making strides in virtual reality, it could hurt their share prices,” continued Pernas. “Plus, there’s the issue of supply chain risk; if Apple doesn’t diversify its supply chains away from China — maybe continuing to emphasize India, for example — it could be a factor affecting their stock value.”
Most analysts who follow Apple predict that revenue will exceed $500 billion in the next several years. That could help push its $180 stock price up to close to $300 before the end of the decade. But, only time will tell.
“Apple’s intimate knowledge of its users, with our entire identities often wrapped up in our phones, presents a massive opportunity,” said Pernas. “If they can leverage AI effectively to offer highly personalized experiences, that’s a game-changer.”
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This article originally appeared on GOBankingRates.com: How Much Will Your Apple Shares Be Worth in 5 Years? Stock Experts Project
