What’s the most successful product in history?
Chances are pretty good you’re holding one in your hand right now.
Apple (AAPL) has sold more than $1.5 TRILLION dollars’ worth of iPhones since 2007.
Since the iPhone debuted in 2007, Apple’s sales have jumped 10X...
It became the first public company to ever achieve a trillion-dollar valuation...
And its stock has handed investors 28 times their money over the past 15 years:
But in today’s letter, I’m going to show you why Apple stock is a terrible investment. Far from being a disruptor, Apple’s business is being disrupted from multiple angles.
That may shock investors who think Apple is one of the finest companies in the world. But I’ll show you the facts, and you can come to your own conclusion.
The iPhone makes up more than half of Apple’s business.
But did you know iPhone unit sales peaked 10 years ago?
Last year, Apple sold 6 million fewer phones than it did in 2015. Take a look at iPhone shipments since 2015:
Clearly, Apple’s flagship product is in terminal decline. Yet it’s managed to keep revenue growth alive solely by raising iPhone prices.
In 2010, you could buy a brand-new iPhone 4 for $199.
In 2014, the newly released iPhone 6 cost $299.
Today, the base model iPhone 16 will set you back $799. The nicest models cost over $1,000.
What’s the most you would pay for a smartphone? Maybe $2,000?
There’s a limit to what even Apple’s famously loyal customers will pay. Unfortunately for Apple and its investors, that limit has been hit.
The list price for the latest iPhone 16 is the same as the iPhone 12 released in 2020.
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That tells us all we need to know—price hikes are tapped out.
And look at Apple’s sales. Apple is perceived as one of the most innovative companies in America.
Yet revenue has been flat for almost three years!
First, Apple’s business boomed from selling more iPhones. That’s over.
Then, Apple kept growing sales by hiking prices. Done.
Despite stagnation in its business, Apple’s stock price has climbed more than 200% over the past five years. Even with the recent selloff, Apple’s still worth over $3 trillion.
iPhone shipments down. Sales flat. Stock up. Huh?
Apple kept rising not because its business was booming, but because the valuation of its stock surged.
Prior to the recent selloff, Apple was trading at 30X earnings—near its highest valuation in 10 years. The only time it was more expensive was at the peak of the COVID bubble.
Now that its valuation is no longer rising… what will propel Apple higher?
Everything about Apple’s stock screams “peak” to me.
To be clear, I’m not predicting Apple will go bust. It has $50 billion worth of cash in the bank and is on track to earn $114 billion in profits this year. It can continue coasting on its past innovations for years.
But you must understand that Apple was the world’s largest and most successful company of the past decade. Surprises—positive and negative—drive stock prices.
When the so-called world leader in innovation isn’t innovating, and its business is stagnating, that’s one big negative shock.
Remember, we’re currently in the middle of the biggest technology revolution since the internet—artificial intelligence. Apple isn’t even on the playing field.
Siri is a flop.
Its Vision Pro headset will likely be discontinued.
Apple spent more than $20 billion to produce original TV shows and movies. Yet Apple TV+ generates less viewings in one month than Netflix (NFLX) does in one day.
Apple is a big idea disruptor out of ideas. Its best days are behind it.
I recommend avoiding its stock like the plague.
And remember, everyone and their brother still owns it either directly or through ETFs.
Don’t be one of them. Apple is a disrupted stock. Avoid.
Stephen McBride
Chief Analyst, RiskHedge