Apple’s Innovations Position the Stock for Long-Term Growth

  • Apple (AAPL) just unveiled a bunch of new innovations at its annual developers conference, including its entry into the buy now, pay later market.
  • The constant innovations should help Apple overcome near-term challenges it faces overseas, including EU regulation requiring it to use USB-C ports on the iPhone.
  • Long-term, AAPL stock will be just fine and investors should view the current downturn in the share price as a buying opportunity.

Despite ongoing supply chain and regulatory pressures, Apple (NASDAQ:AAPL) continues to roll out new features and products that will help keep its business and the AAPL stock price buoyant over the long-term.

Apple just wrapped up its annual Worldwide Developers Conference where it introduced several new software features and products that impressed attendees and generated positive media coverage. And while AAPL stock continues to decline along with the broader market, down 26% year-to-date at $132 a share, the Cupertino, California-based company’s innovations and new products position it to rebound strongly when the market finally acquiesces and begins to recover.

AAPL Apple $132

Pay Later Service

The big news coming out of Apple’s developer’s conference was a pay-later option that moves the company further into the financial services sector. The new payment feature, called Apple Pay Later, is an addition to its popular Wallet app, and part of the consumer electronics giant’s expansion into the world of online finance.

Apple Pay Later enables people to pay for things over four equal installments, paid monthly without any interest being charged. The move into the pay later loan segment puts Apple into direct competition with major financial technology (fintech) players such as PayPal (NASDAQ:PYPL) and Affirm (NASDAQ:AFRM).

However, Apple, which has had success launching its own credit cards, is well-positioned to succeed and win market share in the buy now, pay later space, say analysts.

Other news coming out of Apple’s weeklong conference was the unveiling of the latest iPhone software, iOS 16, which includes a new lock screen; two new Mac computers, including the biggest refresh of its MacBook Air model in more than a decade; improvements to the Apple Watch that include the addition of atrial fibrillation detection to help with heart health; an overhaul of Apple CarPlay that will integrate it more with a vehicle’s instruments such as the speedometer and other gauges; and more multitasking features for the iPad, including a long-awaited weather app.

All the new technologies will use Apple’s proprietary M2 chip, which the company developed internally after ending its long-term relationship with Intel (NASDAQ:INTC).

Overseas Challenges

The latest upgrades, products and features position Apple for a strong future and should help the company remain at the front of the pack in the consumer electronics space.

However, in the near-term, Apple continues to manage a number of overseas challenges that are weighing on its share price. These include ongoing Covid-19 lockdowns in China that have impacted its manufacturing and difficulty sourcing components and managing supply chains throughout Asia that threaten production of its iPhone.

Any challenges to the iPhone are bad news for Apple, as global sales of the popular smartphone continue to account for more than half of the company’s revenue, generating almost $192 billion in 2021.

On the other side of the world, in Europe, Apple also faces some near-term headwinds. European antitrust regulators have charged Apple with restricting rivals’ access to its chip technology in a move that could force the iPhone maker to open its mobile payment system to competition on the continent. The European Commission said it has sent Apple details of how the company has abused its dominant position in markets for mobile wallets on iOS devices and ordered that changes be made.

Separately, the EU has agreed to a single charging port for mobile phones, tablets and other electronic devices. That decision is seen as a blow to Apple, which must now change the connector on its iPhones sold in Europe by 2024. iPhones are in a unique position as they are charged from a Lightning cable that’s made in-house by Apple, while rival Android-based devices use more standard USB-C connectors.

Apple has warned that the proposal, which is designed to cut down on electronic waste, will hurt innovation going forward. However, it’s not clear how Apple will get around the new European requirements.

AAPL Stock Is Built for Long-Term Success

Despite some immediate issues, Apple continues to be the world’s dominant consumer electronics company and is likely to remain in that position for many years to come. Even as it manages supply chain issues in Asia and shifting regulations in Europe, the company continues to upgrade its existing products and introduce new ones that offer users constant improvements.

This approach has proven to be a recipe for success and should help Apple rebound mightily when the current market selloff finally ends. In the meantime, investors should view the current downturn in Apple’s share price as a buying opportunity. AAPL stock is a strong buy.

On the date of publication, Joel Baglole held a long position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.  

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.


Article printed from InvestorPlace Media, https://investorplace.com/2022/06/apples-innovations-position-the-stock-for-long-term-growth/.

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