Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money

79% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

FREE EBOOK

How to Day Trade Stocks & Indices

  • Place your first trade
  • Identify 9 chart patterns
  • Pro strategies step-by-step

You'll also receive our newsletter and other Opto emails in accordance with our privacy policy.

Updates

Can Apple's share price maintain its record highs?

Apple's [AAPL] share price hitting an all-time high of $331.75 last week is an astounding show of resilience considering where the markets were a couple of months ago.

The share price had slid at the end of February as the coronavirus pandemic disrupted iPhone production and shuttered Apple Stores. However, since 23 March, Apple's share price is up over 48% as optimism returns to the market. This roughly follows the S&P 500's own 43% gains in the same period as traders bet on a speedy economic future and Apple’s ability to shift iPhones this year.

But is this positivity justified? Or should Apple’s share price investors rein in their optimism?

 

 

Why iPhone sales will make or break Apple's share price this year

iPhone sales could make or break Apple's share price this year. According to a Gartner report, smartphone sales tanked 20% in the first quarter of the year. For Apple the damage was less severe than some of its rivals, coming in at an 8% decline.

Now, supplier Broadcom has hinted at a delay in production. This could cause problems for Apple. Usually, the company announces a new phone in September. But a production delay could push this back to mid-October, meaning Apple loses out on the lucrative last three months of the year - ie holiday sales. Not good news for Apple’s share price.

But have the markets already priced this into the share price?

“This [delay] is not entirely surprising to us, as our model assumed the 5G iPhone would be delayed by roughly a month due to supply chain disruption and certain yield issues on 5G components,” Barclays analyst Tim Long said in a note to investors.

More clues on the next iPhone's release will come on 22 June at Apple's virtual Worldwide Developers Conference. 

“This [delay] is not entirely surprising to us, as our model assumed the 5G iPhone would be delayed by roughly a month due to supply chain disruption and certain yield issues on 5G components” - Barclays analyst Tim Long

 

Subscription services drive growth

Apple's decision to diversify into subscription services has helped it weather the coronavirus outbreak.  In the latest quarter, revenue from subscription-based services like Apple Music and iCloud were up 16%, coming in at $13.34 billion.

In the longer-term, JP Morgan analyst Samik Chatterjee reckons subscription streaming service Apple TV+ will have over 100 million subscribers by 2025. Apple’s streaming service has made a relatively slow start but the company is looking to pump money into original content production and expand its content library. Whether this is enough to hit the 100 million mark in five years remains to be seen.

100million

Predicted number of Apple TV+ subscribers by 2025

  

Time to buy Apple’s share price?

Analysts on the FT have an average $325 target on Apple's share price. This would actually see a 1.96% downside on the current share price. Of the 39 analysts, 12 rate the share price Buy and 17 rate it Outperform. For investors, there's also the added bonus of a 1.02% forward dividend yield.

Wedbush analyst Daniel Ives has increased his share price target from $350 a share to $375. Hitting this would represent a 13% upside on the current share price.  Ives believes that iPhone sales could benefit from both pent up demand and the upcoming switch to 5G.

“With roughly 350 million ...iPhones in the pent up ‘window of an upgrade opportunity,’ we believe [Apple] has a unique opportunity to capture this delayed supercycle opportunity with a major 5G cycle on the horizon which will include a host of new smartphone versions/models for iPhone 12.”

“With roughly 350 million ...iPhones in the pent up ‘window of an upgrade opportunity,’ we believe [Apple] has a unique opportunity to capture this delayed supercycle opportunity with a major 5G cycle on the horizon which will include a host of new smartphone versions/models for iPhone 12” - Wedbush analyst Daniel Ives

 

Ives isn't alone in backing Apple's share price for bumper growth. In May, Steven Fiorillo wrote on Seeking Alpha that he expects the stock to hit $400 by October 2021. That would see a 20% upside based on the current price.

Apple itself seems confident in the stock, having announced plans to buy back $50 billion in its own shares. Investors could take that as a sign of more highs to come.

Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

Continue reading for FREE

Join the 40,000+ subscribers getting market-moving news every week.

Written by

Free ebook

Tricks of the trade: 7 interviews with the world’s top traders

Get it now

Related articles

7 Interviews with the world's best traders

Learn about the techniques and strategies used by expert traders

Get it now