Hugo Investing

Apple stock’s big problem

Apple stock has a big problem. You need to know this if you are considering buying the stock or if you have it in your portfolio.

So, here they are: Apple’s new products

On Wednesday, 7 September, Apple launched its new products with much fanfare again. But, as always, it disappoints. Why? On the one hand, because the commotion is too much, creating too high an expectation. But – on the other hand – Apple improves its products just a little bit every year. I think Apple has long been able to make an iPhone where the battery never runs out, which you can fold into a stamp and put in your inside pocket, just as Philips could make a light bulb that didn’t break 100 years ago.

Apple’s share price

Around the day Apple announced its new products, Apple’s share price did not move much. Looking back, this is always true for the past few years.

But, this year, the share price did move a bit. Namely, in January, you had to pay $180 for 1 Apple share, and at the time of writing, it was around $155. Is this crazy? No, not at all, because considering a lot of shares of comparable large companies, Apple is not doing so crazy this year. Especially if you live in the eurozone – and you probably do – you would have had a price gain on the dollar of about 12% compared to 1 January this year, so the picture looks even better.

Looking further at Apple’s share price over a more extended period, say from 2012, you see a very nice upward trend, which started at $15. Especially in the last two years, there were some more violent outbursts, which – not surprisingly – started at the beginning of the corona crisis.

Apple’s performance over the last ten years has also been good; higher sales and more profits!

But Apple’s money is running out very quickly

Many people will know that Apple is one of the world’s largest companies with a lot of cash on its balance sheet. For instance, at the end of 2019, they still held over $100 billion in cash. At the last report, at the end of June this year, that had shrunk to under $50 billion. What’s going on….?