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Streaming service and new iPhone. How did Apple's stock go up 83% and what's next for the company?
Apple shares reached record gains in 2019. And in 2020 they will grow by another 21%, we are confident in the Wedbush investment company. This will happen thanks to 5G technology.
Since the beginning of this year, shares of the smartphone maker Apple have soared by 83%, and the company's capitalization has grown by $ 530 billion. In the second half of the year, investors actively bought shares of Apple, expecting that the United States and China will eventually resolve the trade disputes, explained the rise in Bloomberg.
Rumors about a new iPhone model and the launch of a streaming platform also contributed to the rise in prices. The Bloomberg agency suggested that by the end of 2019, the shares of the "apple company" will reach a record growth over the past ten years. Nevertheless, most experts are confident that next year, Apple shares will continue to rise in price.
How the share price has changed
Apple started 2019 with weak performance. On January 2, the company announced that it was cutting earnings forecasts for the first time in nearly two decades. This came as a big surprise to the market. The manufacturer's shares plummeted by 10%.
The company's stock was also hampered by news of slowing iPhone sales, a lack of a clear strategy to roll out the next generation of 5G communications and a trade conflict that severely hampered the company's business, said Cowen analyst Krish Sankar.
However, in early June, Apple shares resumed their steady growth. According to Sankar, investors have changed their attitude towards the company thanks to Apple's services division. It came into the spotlight after the company launched its video streaming service and opened an online video game subscription. This improved Apple's overall results.
The market also monitored news on the new iPhone model with 5G function. The first model with support for the new generation of communications is expected to be released in the fall of 2020. Finally, by the end of the year, hopes for improved U.S.-China relations were rekindled.
As a result, Apple stocks far outnumbered other tech stocks. For comparison, since the beginning of this year, Microsoft's capitalization has grown by more than 55%, while Amazon has risen in price by about 23%. The S&P is up 30%.
Apple's future promotion
At the moment, Apple shares can be called overvalued. This is indicated by the multiples: the price-to-earnings P / E ratio is now 26.75. For comparison, Intel has a figure of 14.5, while Align Technology has 4.27.
And yet, experts from many financial institutions believed in further appreciation of the company's shares and raised the target prices for Apple shares. The highest forecast was given in the Wedbush investment company – $ 350 per share. This is 21% more than the current levels.
Wedbush experts recommend buying Apple stock, believing that the next generation of 5G iPhones will be noticeably more functional and faster than the iPhone 11. Wedbush is also confident that Apple will lead the 5G market. In 2019, iPhones accounted for about 55% of Apple's total revenue.
In early December, Cowen raised its target price from $ 290 to $ 325, and Piper Jaffray raised the target by $ 15 to $ 305. Both companies also advised buying Apple shares.
The consensus forecast of Refinitiv, on average, believes that over the horizon of the year, the stock of the smartphone manufacturer will fall in price by 8% to $ 266.22 per share. Nevertheless, the overwhelming majority of the experts who entered the consensus give a “buy” recommendation.