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Apples slow game on show

Article By: ,  Financial Analyst
March 26, 2019 3:51 PM

Apple’s slow game on show

The wait for game-changing innovations goes on

Apple keeps showing that its era of game-changing innovations is over, at least for now. The stock fell modestly again on Tuesday, after dipping the day before. The price move belies the apparent importance of a raft of product announcements on Monday, including the iPhone maker’s incursion into Netflix’s streaming video sphere.

A closer look at the launches, which extend the move away from topping-out handset revenues, shows why the market’s underwhelmed.

  • The News Plus subscription portal has notable holes, including the New York Times and the Washington Post
  • Apple TV Plus is anything but simple and compelling, looking on the surface like a paid version of the existing multi-channel platform. As exclusive content therein gains traction, that may change, but only over time
  • The credit card partnership with Goldman Sachs looks most promising. The Federal Reserve this month reported U.S. card debt closed 2018 at a record $870bn. Still, there is little prospect the JV will take much share from dominant U.S. players like JPMorgan, Capital One, BofA and others, even over a decade

For Apple, the true value of these launches is the foothold they create for the longer view. Overall, the roll-outs look very much in the mould of iterative strategies favoured by CEO Tim Cook. They’re the antithesis of the more disruptive innovations that were the signature of Cook’s predecessor, Steve Jobs.

Yet the stock is up 22% so far this year regardless. With recent warnings out of the way and iPhone forecasts ‘right-sized’, Apple’s increasingly diverse revenues and modest forward valuation continue to attract. It is the broader outlook, fogged by the lingering U.S.-China chill and global growth concerns that remain inescapable for huge corporations like Apple.

Right now, although Apple shares are backed by the solid gradient of an ascending 200-week moving average, the approach to a rising trend line that was breached with some drama late last year poses a significant challenge. More convincing news looks required before Apple buyers are prepared to cross it.

Price chart: Apple Inc. DFT – weekly [26th March 2019, 19.30 GMT]

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