Apple (NASDAQ:AAPL) stock needs a new growth story. Since Jan. 26, AAPL stock is down 16%. Shares that sold for $143 a piece then closed yesterday at under $120. Should you and I continue to hold Apple stock or let it go?
Apple stock is still the most valuable in the world today, with a market cap of $2.01 trillion. Multiple stock splits mean there are now nearly 16.8 billion shares outstanding, some 110.2 million of which trade on an average day. Since late January, more than $350 billion in wealth drained from investors’ accounts.
Two weeks ago, I suggested you hold AAPL stock for stability not capital gains. What’s now become clear to me is uncertainty around its growth narrative.
Three Sources of Growth
Growth could come in any or all of three directions: health, wealth or TV.
Health means the Apple Watch, which is continuing to evolve as a health monitor. A new Stanford study shows the Watch, combined with the iPhone, can measure frailty in heart patients, even replacing in-clinic tests.
Apple ads now show the Watch notifying people of irregular heart rhythms, performing ECG tests, and notifying caregivers when a patient falls and can’t get up. If you’re elderly and living alone, these are life-saving features that go well beyond what Alphabet’s (NASDAQ:GOOGL) FitBit can do.
The Watch, which starts at $399, has been a Class 2 medical device since 2018. The next version will have a blood sugar sensor.
More Popular Than Cash
Apple Pay and other digital wallets are now more popular than cash. Apple Pay continues to expand in new markets like South Africa. It’s becoming mainstream within credit networks and even cryptocurrency apps.
According to Juniper Research, Apple Pay is far ahead of Google Pay and Samsung Pay, and that lead is sustainable. The report estimated that in 2020, Apple Pay had nearly 227 million users up from 140 million in 2018. That’s twice the 100 million users each in 2020 for Google and Samsung wallets.
The Apple credit card will soon be usable by entire families. Apple is not a bank. It finances only purchases of Apple products. There already exist banks using the name Apple. But this hasn’t stopped Apple before when there were new markets to enter. (Correct, Ringo?)
It’s Not TV…
The recent fall of ViacomCBS (NASDAQ:VIAC) shows the opportunity before Apple TV.
I called it overpriced a few weeks ago and its value has since been cut 55%. At a market cap of under $30 billion, it would be seat cushion money for Apple. Discovery (NASDAQ:DISCA), another big Archegos holding, would be even cheaper at $18 billion.
Apple TV+ movies are getting strong reviews but it has yet to gain traction in streaming. Most of its 33 million viewers aren’t paying for it while Netflix (NASDAQ:NFLX) has over 200 million paid subscribers.
But a service like ViacomCBS’ Paramount Plus, which also had 30 million viewers at launch, could put Apple in the game. Combining it with Apple TV+ could let the service pass Comcast’s (NASDAQ:CMCSA) Peacock and AT&T’s (NYSE:T) HBO , leaving only cloud peers Alphabet, Amazon (NASDAQ:AMZN) Prime and Netflix ahead of it.
The Bottom Line on AAPL Stock
I haven’t even mentioned Apple silicon. This will unify the company’s product line and increase its share of hardware revenue.
AAPL stock is still volatile. Late 2018 saw it fall by over 30% over three months. There was a 20% drop last year early in the pandemic, and another drop of over 10% in late summer. The latest fall is in line with those.
Apple’s dividend, once considered generous, is no longer worth mentioning because its capital gains have been so huge. If you bought in five years ago, your shares are worth almost 340% more now, even with the recent fall.
If a bus ran over CEO Tim Cook tomorrow (god forbid), Jeff Williams would step right in. Apple is big enough to have a long line of executives behind him. It’s an institution, the biggest in American industry.
Still want to sell your Apple stock?
At the time of publication, Dana Blankenhorn directly owned shares in AAPL, T and AMZN.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com, tweet him at @danablankenhorn, or subscribe to his Substack newsletter.
