Apple Stock 101: What Every Investor Should Know
I believe that every investor looking to invest money in Apple Stocks ($ AAPL) should be aware of a few important facts about the company and its stocks. Today, the Apple Maven presents “Apple Stock 101,” an article that provides the basics for old, new and future Apple shareholders.
“Apple Stock 101” is meant to be a new, frequently updated document to use as a reference guide. Therefore, feel free to bookmark this page and come back for future updates.
The Cupertino-based company was an important part of the personal computing revolution of the 1970s and 1980s. Apple was co-founded by the now famous Steve Jobs and Steve Wozniak to market one product as a first step: the Wozniak Apple I PC. .
Later in the 1980s and 1990s, Apple rose to prominence for its line of Macintosh computers – a golden age for the company. But the period also marked the end of Steve Jobs’ first era, with the celebrity founder being ousted in 1985.
Apple struggled through most of the 1990s, even flirting with bankruptcy at one point. The stock fell nearly 80% between March 1992 and December 1997. Steve Jobs returned to the business down in the late 1990s to make tech industry history again during the next decade and a half.
Between 2001 and 2010, Apple changed the world by introducing devices that have become household staples. The popular MP3-compatible iPod was released in the early 2000s, while the category-defining iPhone and iPad were released in 2007 and 2010, respectively.
Fun fact: It was during this period marked by the Intel-based Mac and the first rounds of the mobile revolution that Apple stock made its biggest gain over three years: 1000% between 2003 and 2006.
Today, Apple is a tech giant that sells multiple products and services ranging from 5G-ready smartphones to smartwatches and even financing through a credit card partnership with Goldman Sachs ($ GS). As of May 2021, the consumer discretionary conglomerate was the most valuable company in the world and the only one in the United States to have ever been valued at more than $ 2 trillion.
Apple’s business segments
Apple has often been called “the iPhone maker” for good reason. In fiscal 2020, half of the company’s sales came from this product category. Mac and iPad, two extremely popular product categories, accounted for no more than 20% of the company’s total revenue combined.
See the charts below showing the distribution of income on the left and the distribution of operating profits on the right. Note that although it only accounts for a fifth of the revenue, the services segment (i.e. App Store, Apple Music, Apple TV +, etc.) produced more than a third of the profit. of fiscal year 2020. This is the case due to more scalable margins for most services and software.
The two charts below break down the revenue growth in a few different views. On the left, note that Apple Watch and AirPods helped make “other products” the fastest growing segment in 2020, at 25% year-over-year. The laggard was the iPhone, mainly due to the delayed launch of the iPhone 12.
On the right, it becomes clear that developed markets in the West performed better during the year of the pandemic, growing at least 7% despite the challenges. Greater China has suffered the most due to (1) the previous COVID-19 blow and (2) the lack of a 5G-capable iPhone in a country where 5G network infrastructure is ahead of the rest of the world .
Apple share performance
Have you ever wondered how much you could have made investing in Apple stocks during the December 1980 IPO? Don’t ask me anymore: 124,000%. This means that a $ 1,000 investment in Apple in the early 1980s would have grown to over $ 1.2 million today, for an annualized return of 19%.
Below is a chart of Apple’s stock price since just before the Great Recession, adjusted for stock splits, against the S&P 500 ($ SPY), Nasdaq ($ QQQ) and Dow Jones ($ DIA) indices. ). Note that Apple has largely outperformed its benchmarks in the market over the past decade and a half.
Here are some important facts and figures about Apple stocks:
- Annualized return of 19% since IPO, better than the S&P 500 by about 11 percentage points;
- Annualized volatility of 45%, measured by a standard deviation, which is a solid three times higher than the volatility of the S&P 500 (i.e. riskier). However, as Apple has matured as a company and a stock, volatility has fallen to a much more manageable level. 28% since 2010;
- Maximum peak-to-trough reduction of 82%, a painful setback that occurred not at the height of the dot-com bubble correction, but in 2003, during the recession that followed. In early 2005, Apple had already found unprecedented heights.
- Fun fact # 1: Although Apple has produced exceptional returns since the IPO, the first 18 months have been very difficult. Between December 1980 and early July 1982, Apple’s stock fell 62%. Since then, the shares have increased 324,000%.
- Fun fact # 2: Up to 19% annualized returns since IPO date can be exceptional, the stock’s best long-term performance has occurred between the low of 2003 and today. Over that 18-year period, Apple stocks produced a staggering annualized gains of 42%! An initial investment of $ 1,000 in April 2003 would have been worth half a million today.
How long was the first time you held Apple shares? Where do you own it? To gauge the demographic profile of our audience, I asked Twitter the following question:
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