Can Apple Stock Reach $1000 or even $500?
Can Apple Stock Reach $1000: Yes, somewhere between 2035 and 2040. It would be faster if Apple launches a new product that performs well
Can Apple Stock Reach $500? Yes, it is likely to reach $500 somewhere between 2029 and 2031. This could speed up if Apple launches a new product that performs well
Latest Apple Stock Price
It is true that Apple has weathered a downturn like no other, but how much steam is still left in the stock? Can the share price march towards $200 next year or more optimistically will apple reach $1000 ever in the future? Let us find out
Apple Inc has proved to be a safe investment in the downturn market in 2022. While major tech stocks like Netflix are down by 50% in the last year, Apple shares are down by only 10%. It has also beaten the major indices with Nasdaq 100 down by about 25% (as of 1.12.2022).
Apple has officially introduced its latest innovation, the Apple Vision Pro. This cutting-edge device seamlessly blends digital content with the user’s physical space, navigated by eye movements, hand gestures, and voice commands
- It features a three-dimensional laminated glass structure that contours to the user’s face
- A pair of custom micro-OLED displays providing more pixels than a 4K TV to each eye
- An array of advanced cameras and sensors for environmental understanding and hand input detection
- The device is equipped with speakers for Spatial Audio, a digital crown for a home view, and immersion control
- And an external battery that supports up to 2 hours of unplugged use
The Vision Pro is integrated with familiar Apple apps, like Safari, Photos, Music, and Messages. It will be priced above $3000. With this, Apple will add a new source of revenue for years to come though there has been no significant gain in the stock price since the announcement. Product offtake could determine a valuation change.
Can Apple Stock Reach $1000: Positives and Negatives
Growth of the service segment – One of the primary reasons for the outperformance of Apple’s share in 2022 is its minimal dependence on the advertising industry. Apple Inc has promoted its service business quite a bit in the last couple of years. The result is, it is the highest-margin business for the company. In the recent quarter, the service sector contributed 20% out of $90 billion in revenue but made up one-third of net income.
The service sector is not only growing but its profit margin is also climbing. In the latest quarter, the profit margin for the product segment dipped 152 basis points while for the service segment, it rose 169 basis points. Surely, the service sector is the one to look out for in the upcoming decade.
Disruption in iPhone manufacturing- Present investors are mostly concerned about Apple’s dependence on China for iPhone manufacturing. Covid-19 cases are again rising in the country and due to government policies, several lockdowns have been announced in the past couple of months affecting iPhone manufacturing. There has been considerable pushback from the workers at Foxconn, the plant responsible for 70% of iPhone shipments.
Although, Apple is trying to diversify its iPhone manufacturing in India and JP Morgan Chase estimates that around 25% of Apple’s products will be produced in India by 2025. But the company expects that it will produce at least 3 million fewer iPhone 14s this year than earlier estimated. Dependence on China may hurt Apple in the upcoming years also.
A Look at Valuations of Stock to Reach $1000
The current share price for Apple Inc is $147.81 (as of 2.12.2022). It is currently trading at price to earnings ratio (P/E) of 24.30 and has earnings per share (EPS) of 6.11 and hence the share price of $148.
Now the service segment is projected to grow at a compound annual growth rate (CAGR) of 3% through 2030 from 2021 and generate $388 billion and the service segment is expected to grow at a CAGR of 18% to $304 billion. Hence, total revenue by 2030 is expected to be $692 billion of which the service segment will contribute 44% and the hardware segment will contribute 56%.
Similarly, earnings per share are expected to reach $7.96 by 2026 from $5.61 in 2022 and grow at a CAGR of 7.24%. Considering the growth potential of the service segment, it will be modest to assume a CAGR of 10% for the next 10 years.
The earnings are expected to reach $14.55 by 2031. The five years mean P/E is 24 and P/E is expected to grow further for the next few years due to the service segment. Assuming a modest P/E of 25, the target share price for 2031 comes out to be $363. Hence, $1000 is just too far away even for a growing and stable company like Apple Inc.
Can Apple Stock Reach $1000? Historic Data
- Apple needs to rise nearly 7 fold to reach $1000
- The stock has risen 7 fold over the last 9 years. Between 2013 and 2019, the stock rose 3 fold while it rose 2 fold between 2019 and 2023
- During that period, iPhone users globally have risen nearly 4 fold, or about 21% of the world’s population. EPS rose 3-4 fold during that period
- It is unlikely that iPhone users will rise 4 fold again in the same period. Even if the share of other products and services were to rise at a faster pace, it is unlikely Apple EPS will rise at the same pace as the last 9 years
- At a slower pace, Apple is likely to reach $1000 only after 2032 and probably between 2035 and 2040 [2036 assuming growth of 15% per annum]
- However, this assumes the current product and service profile. Newer Innovations that expand the market for Apple products could completely transform the equation and speed up the pace of growth.
Can Apple Stock Reach $500
Yes, even at a conservative 15% per annum, Apple could reach $500 by 2031. Changes in Valuations, as well as product innovations, could speed up the time frame to 2029 or even earlier.
- Apple Stock Price Prediction 2023 is $205
- Apple Stock Price Prediction 2024 is $244
- Apple Stock Price Prediction 2025 is $288
- Apple Stock Price Prediction 2026 is $329
- Apple Stock Price Prediction 2027 is $368
Also Read: Apple Stock Forecast 2023
Can Apple stock reach $1000?: Conclusion
It is likely that Apple will reach $1000 somewhere between 2035 and 2040. However, this could speed up if Apple launches a new product category that can create an entirely new revenue stream for the company. The biggest risk for Apple is Tim Cook’s retirement.
Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Index or Individual Stocks. Please consult a registered investment advisor to guide you on your financial decisions.