Dear investor,
It’s Apple Inc. (AAPL). Remember me? You used to obsess over my every move, like the paparazzi with Brad and Angelina. You used to snatch my stock up in droves every time I rolled out a new product at my top-secret Silicon Valley unveilings.
Heck, at one point, my Apple stock essentially was the Nasdaq — as it went, so went an entire index. That’s not the case anymore. Even if I was every bit the unstoppable, universally recognized brand I was two or three years ago, my Apple stock is no longer the coolest, hippest thing on the Wall Street block.
Google (GOOGL), Facebook (FB) and Netflix (NFLX) have surpassed me in that admittedly difficult-to-quantify category.
A Word From Apple
What isn’t difficult to qualify are the returns — or lack thereof. Since peaking at $132 last July, my precious Apple stock has fallen more than 23%. My stock hasn’t traded above its 200-day moving average since before Thanksgiving. Those top-secret product launches no longer stir up much enthusiasm … in part because they’re not all that top-secret anymore.
That’s because, with only the occasional exception (or do you no longer remember my Apple Watch?), everyone knows what’s coming at those product launches these days: another iPhone. Sure, my iPhones still sell pretty well, and plenty of people will buy my iPhone 7 when it launches in September. But new iPhones no longer get investors excited. (Seriously, though, the iPhone 7 will be much more exciting — it’s waterproof!)
There was a time when my iPhone launches were an automatic 10% to 15% run-up in Apple stock in the days that followed. No longer. I could almost hear the collective yawn echoing off the Wall Street concrete when I rolled out the iPhone SE. I’m not gonna lie, it kind of hurts my feelings.
Okay, okay, I get it — you want to see something that’s truly new. Hm, well, let’s see … I may or may not (remember, everything I do is top secret; just ask the FBI) be introducing the Apple Watch 2 later this year. Oh, and the iPad Air 3. Will those get you to buy AAPL shares again?
No? Why ever not??
Oh, right, those aren’t really new. So, basically, you’re saying you’re not interested in any product that has a number higher than “1” next to it, and until that happens, you’re not willing to drive my stock back up to last summer’s peaks, or beyond?
I realize that my last quarter was rough, with year-over-year sales basically flat. But, hey, prior to that I had my best four quarters of sales growth since 2012, and my net income growth has consistently been above 30% — and more than 40% on a per-share basis, thanks to my record-setting buyback program.
Innovation Is the Key for AAPL Stock
Alas, I’m getting the sense that stellar sales and earnings growth no longer does it for you.
My mind-blowing, unprecedented innovation under the late CEO Steve Jobs (key point there) were the real reason Apple stock had perhaps the greatest eight-year run (more than a 5,000% return from 2004 to 2012!) in the history of the stock market.
And like Steve Jobs once said, I need to get back to the basics. If Google can come up with a self-driving car and a computer disguised as a pair of glasses, surely I can come up with something!
I’ll get back there, I promise. But I know promises aren’t enough of a reason to get you to buy stock in me — at least not the way you used to. You want action. But believe me, it’s coming!
Until then, I won’t be offended if you think GOOGL, FB or NFLX are the better long-term buys than Apple stock. To be perfectly honest, I’m starting to think that myself.
Yours truly,
Apple Inc.
As of this writing, Chris Fraley did not hold a positon in any of the aforementioned securities.
