Is Apple A Buy, Sell, Or Hold Before Q4 Earnings?

Seeking Alpha2021-10-27

Summary Apple reports Q4 FY 2021 earnings on Thursday, October 28th. Key questions: whether the ongoing supply chain chaos will snarl Apple's holiday aspirations–and whether demand can keep up with ...

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走在雨中
2021-10-27
走在雨中
预计2021年每股收益为5.58美元，2022年为5.63美元
CalKan
2021-10-27
CalKan
Buy and hold
albert77
2021-10-27
albert77
Go go
Cheryi
2021-10-27
Cheryi
Follow
5D1T2
2021-10-27
5D1T2
[财迷]
WannaBluffy
2021-10-27
WannaBluffy
Comment
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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Apple A Buy, Sell, Or Hold Before Q4 Earnings?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-27 11:24 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4461874-apple-buy-sell-hold-q4-earnings><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nApple reports Q4 FY 2021 earnings on Thursday, October 28th.\nKey questions: whether the ongoing supply chain chaos will snarl Apple's holiday aspirations–and whether demand can keep up with ...</p>\n\n<a href=\"https://seekingalpha.com/article/4461874-apple-buy-sell-hold-q4-earnings\">网页链接</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"AAPL","symbol_name":"苹果","start_time":0,"source_url":"https://seekingalpha.com/article/4461874-apple-buy-sell-hold-q4-earnings","article_id":"1143606145","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1143606145","pubTimestamp":1635305063,"sourceInfo":null,"weMediaInfo":null,"summary":"Summary\n\nApple reports Q4 FY 2021 earnings on Thursday, October 28th.\nKey questions: whether the ong","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"AAPL":"苹果"},"translate_title":"在第四季度收益之前，苹果是买入、卖出还是持有？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AAPL":0.9},"content_text":"Summary\n\nApple reports Q4 FY 2021 earnings on Thursday, October 28th.\nKey questions: whether the ongoing supply chain chaos will snarl Apple's holiday aspirations–and whether demand can keep up with stimulus continuing to wind down.\nChip shortages and shipping delays are the big wildcards–Apple's outlook will have implications not only for Apple–but for the US economy at large.\n\nfelixmizioznikov/iStock Editorial via Getty Images\nIs Apple Stock Expected to Go Up On Earnings?\nEarnings season hits its peak with Apple (AAPL) reporting earnings after the bell on Thursday, October 28th. Traders have been buying Apple stock after its September correction, but earnings will decide the tug-of-war between Apple bulls and Apple bears.\nData by YCharts\nKey issues on deck:\n\nWill the global supply chain crisis finally drag Apple down with it? The 2020 holiday season (Apple's FY '21) was the best holiday season ever for Apple, with demand boosted by stimulus and limited issues with supply. 2021 looks ominous, with now over 100 ships waiting to unload in the ports of Los Angeles and Long Beach, while the Chinese energy crisis imposes blackouts on some Apple suppliers. I'm not seeing many signs of progress with inflation and shortages, especially with the price of oil rising higher every single week.\nWill consumer demand in the United States and Europe remain strong with stimulus unwinding? With multiple rounds of $1,200 stimulus checks and consumers stuck at home, iPhone revenue hit a record after the pandemic. Now, with $4 gas in many areas of the US, rising food prices, and stimulus spent and gone, those prior year comps could start to look hard to match. This said–I'd expect iPhone demand to remain relatively strong–which only matters if Apple can supply it.\nAs Apple's valuation has risen, services growth is the key to Apple's business growing into its nearly $2.5 trillion valuation. Investors are sure to watch for indications to services can keep growing at a rapid rate, and are likely to be wary of any indications that competition and/or antitrust action could slow growth.\n\nIs Apple Impacted By The Supply Chain Crisis?\nApple is known for having a world-class supply chain. Apple's massive scale means that Apple historically tells suppliers to jump, and suppliers ask \"how high?\" As such, Apple saw far fewer disruptions early in the pandemic than companies with less logistical expertise/firepower (e.g. US automakers). As such, AAPL stock has had a banner FY 2021 and is expected to earn an all-time high of $5.58 per share for the year.\nWith the supply chain situation continuing to deteriorate in the United States, Bloomberg has recently reported that Apple's luck may be coming to an end.\nFrom Bloomberg:\n\n Apple had expected to produce 90 million new iPhone models this year, but is now telling manufacturing partners that the total will be lower because Broadcom Inc. and Texas Instruments Inc. are struggling to deliver enough components, said the people, who asked not to be identified because the situation is private.\n\nApple is now expected to cut production by as many as 10 million iPhones due to chip shortages. Recent reporting shows that if you order an iPhone 13 today, Apple estimates that they can get it to you by early December. But with over 100 ships piled up off the coast of California, I think Apple, like many manufacturers, is being optimistic about shipping dates. Shortages will likely be worse on the East Coast due to the goods having to cross the country through jams at West Coast railyards and trucking warehouses as well.\nLos Angeles Ports: 2021\n\nLos Angeles Ports: 2019\nSource: CNN\nThe port congestion may soon ease, but not for the reason Corporate America hopes. China is facing severe shortages of energy commodities going into winter, and they're already curtailing manufacturing, which has already impacted Apple. Morgan Stanley came out with a note that said they think Apple will gain market share from this because competitors will have even worse problems with the supply chain. I'd push back on this because Apple is a consumer discretionary company.\nNobody needs an iPhone, so if customers wait five years to replace their phones instead of three years, Apple simply loses the revenue. This is to say nothing about shortages of other products, like the Apple Watch. It's possible Apple could use its supply chain muscle to fight through and save Christmas, but I think this situation is such a perfect storm that Apple's record earnings will probably be peaked for the cycle. If Apple sounds the alarm on inflation and the supply chain in their quarterly earnings call on Thursday, it would have implications not only for Apple, but for the global economy as well. I'd much rather own a company like Union Pacific (UNP) here than Apple, given how much of a battle the supply chain is going to be.\niPhone Demand & Services Revenue\nOn the plus side, demand for iPhones seems like it will be fairly resilient. Over the years, Apple has been successful in turning the iPhone from something that affluent consumers would shell out $600-$700 for to something that anyone can pay a small monthly subscription to have. To put this in economic terms, there's a lot of consumer surplus with the iPhone. As such, I'd expect iPhone demand to hold up pretty well, even in the face of consumers having less disposable income with stimulus unwinding and higher prices. The devil, of course, will be in Apple's ability to supply demand. One threat to Apple's growth projections is government intervention, however.\n\nAntitrust concerns. Apple's services revenue growth is especially vulnerable to antitrust action. Apple charges Google (GOOG) over $1 billion per month to be the default search engine on iPhone. Additionally, Apple has a monopoly over the App Store, essentially controlling what apps are allowed to go on iPhones and taking a cut. Apple faces antitrust lawsuits all the time in the US and Europe. Apple's latest surge in services growth will likely be driven by advertising revenue, which benefitted from Apple's privacy changes. These revenue sources are all great for Apple in a vacuum, but the problem is whether the market is pricing Apple stock like all of these revenue sources will see perpetual growth when there is actually political, legal, and economic pushback against them. The question then becomes whether Apple's valuation makes sense in the context of these headwinds to growth.\nRight to repair is potentially a bigger long-term problem for Apple, which has relied on planned obsolescence and rapidly changing technology to coax consumers to upgrade. For example, increasing competition in the automobile market means that cars are now lasting longer, which is better for consumers. If government regulation and/or competition forces Apple to build more durable products, then iPhone sales are not going to sustain themselves at their current pace.\n\nA Side Note: Apple 5G Market Share\nTo oversimplify things, 3G allowed cellphones to send pictures in the 2000s and 4G made iPhones fast enough to watch and send videos in the 2010s. Now 5G is supposed to bringfaster internet to iPhones, with the most obvious use case being watching streaming TV like Netflix (NFLX) or live sports from your phone with minimal interruption. The ultimate goal for 5G is for it to be faster than WiFi, which would be disruptive and a win for consumers. The new iPhones also have a great camera, which is a plus.\n5G hasn't really proved that much so far besides being a corporate buzzword you hear in AT&T and Verizon's saturation of TV advertising, but it will be interesting to see how the technology continues to develop. Apple is dominating the market share for 5G phones with nearly 30% share, nearly twice the share of their closest competitor. I wouldn't extrapolate this to assume that Apple will make huge market share gains for the broader market, but it's a clear positive for the stock.\nWill people rush en masse to buy a new iPhone because it's faster than the old one? I doubt it, but it should provide a tailwind for the stock.\nIs Apple Stock A Buy, Sell, Or Hold?\nI don't particularly like the risk/reward of buying AAPL stock before earnings here. I've previously modeled about 7% annual returns for investors buying Apple at current prices– the present price implies about the same return. Once my largest holding, the increase in the price of AAPL since late 2019 has far outrun the actual capabilities of the business. I'd rate AAPL a hold here, with moderate long-run returns expected and some downside risk in the short-run from the ongoing supply chain chaos. Apple is expected to earn $5.63 in 2022, which would break its all-time record likely to be set when FY 2021 is reported on Thursday. With inflationary/supply chain pressures mounting and stimulus unwinding, I think the FY 2022 earnings estimates are probably a bit too optimistic for AAPL stock, and as such, the risk/reward isn't favorable at this time.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":855994863,"gmtCreate":1635322662375,"gmtModify":1635322662375,"author":{"id":"3528737361716173","authorId":"3528737361716173","name":"走在雨中","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":1,"crmLevelSwitch":0},"htmlText":"预计2021年每股收益为5.58美元，2022年为5.63美元","listText":"预计2021年每股收益为5.58美元，2022年为5.63美元","text":"预计2021年每股收益为5.58美元，2022年为5.63美元","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/855994863","repostId":1143606145,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":855992846,"gmtCreate":1635322568216,"gmtModify":1635322568285,"author":{"id":"3583282865832551","authorId":"3583282865832551","name":"CalKan","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"Buy and hold","listText":"Buy and hold","text":"Buy and hold","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/855992846","repostId":1143606145,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":855087675,"gmtCreate":1635314997292,"gmtModify":1635314997446,"author":{"id":"3575421087208890","authorId":"3575421087208890","name":"albert77","avatar":"https://static.tigerbbs.com/23ad8bf74e09800b779350089d72b84f","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"Go go","listText":"Go go","text":"Go go","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/855087675","repostId":1143606145,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":855005624,"gmtCreate":1635309513825,"gmtModify":1635309513943,"author":{"id":"3568940106394782","authorId":"3568940106394782","name":"Cheryi","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":5,"crmLevelSwitch":0},"htmlText":"Follow","listText":"Follow","text":"Follow","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/855005624","repostId":1143606145,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":855003454,"gmtCreate":1635308985814,"gmtModify":1635308985886,"author":{"id":"3569971237956537","authorId":"3569971237956537","name":"5D1T2","avatar":"https://static.tigerbbs.com/4337cbcb700e1df3423e15a36e4d89b2","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"[财迷]&nbsp;","listText":"[财迷]&nbsp;","text":"[财迷]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/855003454","repostId":1143606145,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":855003100,"gmtCreate":1635308918161,"gmtModify":1635308918324,"author":{"id":"3586986998667843","authorId":"3586986998667843","name":"WannaBluffy","avatar":"https://static.tigerbbs.com/1dd14463a45a95644b65d2bd68777ecd","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"Comment","listText":"Comment","text":"Comment","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":1,"repostSize":0,"link":"https://laohu8.com/post/855003100","repostId":1143606145,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":6341612,"gmtCreate":1635308930392,"gmtModify":1635308930490,"authorId":3586986998667843,"author":{"id":3586986998667843,"authorId":3586986998667843,"name":"WannaBluffy","avatar":"https://static.tigerbbs.com/1dd14463a45a95644b65d2bd68777ecd","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":855003100,"type":1,"supId":0,"prevId":0,"content":"<u>comment</u>","text":"<u>comment</u>","html":"<u>comment</u>"}],"langContent":"CN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":102,"commentSize":21,"repostSize":0,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; 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