A solid quarterly earnings report sent shares of Apple (NASDAQ: AAPL) from $190 to $207.99 by August 3. At the milestone market cap of $1 trillion, what’s next?
$1 trillion is a big number that reflects a smartphone giant’s dominance in the mobile and mobile software space. Yet the stock is still trading at modest valuations (P/E is 19x, forward P/E is 15.65x), to probably discounted to price in the risks of falling iPhone sales.
In the third quarter, Apple generated $53.3 billion in revenue, a new record for Q3, and up 17% from last year. EPS of $2.34 is a 40% Y/Y increase. Polls of iPhone satisfaction at 98% explains why the fans will pay $724 (average selling price), up from $606 a year ago. Worldwide demand for iPhone X, iPhone 8, and iPhone 8 Plus drove revenue growth.
Chances are very high that ASP will stabilize or even move up again for the rest of the year. An iPhone 9 refresh or a shift from iPhone 6 or 7 to X will push AAPL stock to values far-above the $1T market cap.
Apple stock continues to reward long-time shareholders. There are no reasons justifying selling the stock at this time.
