Experts have crunched the numbers and say that Apple is on its way to having a $2 trillion price tag after doubling its stock price in one year.
Feb. 13, 2020
It’s the biggest company by market capitalization in the U.S. and now Apple (NASDAQ: AAPL) has the potential to be worth $2 trillion by the end of 2021. This statement comes following predictions by various equity analysts, including that of technology giant John Zolidis. Apple experienced a rare 7% decline throughout 2018 and then doubled during the past year.
Here are the main ways the tech company could reach the $2 trillion milestone:
1. Variety of iPhone choices
One of the ways analysts believe Apple will reach this level by producing more iPhone models. In the past two years, the company has revealed three new phones, including the iPhone 11, 11 Pro, and Pro Max. It’s predicted that Apple will launch five new iPhone models in 2020 that would be positive for the company’s overall growth. In addition, a survey conducted by USB found that 20% of people cited 5G as a positive factor and iPhone purchase intent is also improving across different areas. The bank also sees Apple’s iPhone sales reaching $196 million in fiscal 2020, meaning a 5% increase from 2019.
2. Strong Wearables Growth
Last year was a blockbuster year for Apple’s wearables, which includes the Apple Watch, AirPods, and Beats products. In the fourth-quarter earnings, Apple CEO Tim Cook revealed that this category reported a record increase in every market they track and was “well over 50% growth.” This isn’t a one-off, with this being a theme of Apple’s conference calls for over a year. It is an area that experts predict to keep accelerating and an important market for the technology company to hit the two-trillion-dollar mark. For instance, the Apple Watch and Airpods claim around 38% and 55% in their respective markets, while Apple TV+ was up 17% year-over-year to $12.7 billion and is the company’s answer to Netflix (NASDAQ: NFLX) and Disney’s (NYSE: DIS) Disney+.
3. Easier Comparisons
Apple entered 2019 reporting its revenue had dropped by 5% year over year. On top of that, iPhone sales fell by 15%, which the company blamed on economic weakness in China. This decline was felt during other quarters, with revenue falling 5% in the second quarter, and then rebounding a small amount in the following two quarters, increasing by 1% and 3% respectively. Due to the lower than predicted results of 2019, Apple will have a low bar to clear coming into this year and thus it will be fairly easy for them to make numbers in 2020. However, the guidance for the next quarter is wider than usual, because of the uncertainty in the Chinese market caused by the coronavirus.
Other Correct Predictions
While Apple was the first of the big tech names to reach the $1 trillion mark in 2018, it is up against a number of rivals who have since met the mark. Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), and now Alphabet (NASDAQ: GOOGL) have also joined the trillion-dollar club. If you add up the total value of each, including Facebook (NASDAQ: FB), the five most valuable tech companies in the U.S are worth a huge $5.2 trillion together.
The future $2 trillion prediction is, at this stage, just fun with numbers. Although the analysts’ maths shouldn’t be dismissed too quickly as Loup Ventures managing partner Gene Munster, predicted that the tech company would be the best performing FAANG stock of 2019 and that was exactly what happened. If the projected $2 trillion valuation comes true, then the next couple of years will be a profitable and wild ride for Apple investors.
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in Apple. Read our full disclosure policy here.