Apple's New iPhones: What It Means For Investors

Sep. 12, 2018 4:45 PM ETApple Inc. (AAPL)142 Comments

Summary

  • Apple's new device lineup has been announced, featuring new smartphones and smartwatches.
  • The new iPhones have refreshed the product portfolio while still reaching across a wide spectrum of pricing points - which I believed was crucial.
  • I remain an AAPL bull, with my investment thesis more firmly grounded on service growth over the upcoming years than on the short-term success of the newly-launched devices.
  • Members of our private investing community, Storm-Resistant Growth , get our best ideas and insights. Get started today >>

Apple's (NASDAQ:AAPL) new device lineup has been released. During the company's now traditional late summer annual event, the iPhone Xs, Xs Max and Xr were introduced, boasting features that were in line with expectations and entry prices that were up to $100 higher than forecasted by some experts. Today's product refresh also included the launch of the Apple Watch Series 4, but not the anticipated iPad Pro update.

Because the iPhone is still by far Apple's most important product category, at the very least from a revenue point of view (representing roughly 60% of the company's total revenues in the past two quarters), I will focus today's discussion on this particular device.Image credit: Apple's event presentation

What mattered most today: iPhones

Much could be said about the new products from a features and technology perspective. However, as a shareholder, I'm more interested in the event's impact to the investment thesis.

As a quick revisit, I believe the success of Apple's iPhone in the first three quarters of fiscal 2018, when segment sales increased an astonishing 16% while the smartphone industry in general saw only timid growth if at all, resulted from two key factors.

First, but less impactful, the strong global macroeconomic environment lifted all boats, even if modestly. Second and more importantly, Apple's iPhone lineup in the back end of 2017 captured the widest range of price points since the first release of the company's smartphones, with the SE on the low end selling at $349 and the large-capacity X going for $1,149. This pricing strategy means that Apple, until recently an aspirational brand that had not been within the reach of a large chunk of the global smartphone consumer base, now appeals more to both a price-sensitive crowd (and to certain demographic groups in emerging markets) as well as to more affluent buyers.

Note from the author: AAPL is only one of the names that I have discussed in more detail with my Storm-Resistant Growth community. To dig deeper into how I have built a risk-diversified portfolio designed and back-tested to generate market-like returns with lower risk, join my Storm-Resistant Growth group. Take advantage of the 14-day free trial, read all the content written to date and get immediate access to the community.

This article was written by

DM Martins Research profile picture
20.45K Followers
Tracking Economic Inflection Points To Guide Your Asset Allocation Strategy

Daniel Martins is a Napa, California-based analyst and founder of independent research firm DM Martins Research. The firm's work is centered around building more efficient, easily replicable portfolios that are properly risk-balanced for growth with less downside risk.

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Daniel is the founder and portfolio manager at DM Martins Capital Management LLC. He is a former equity research professional at FBR Capital Markets and Telsey Advisory in New York City and finance analyst at macro hedge fund Bridgewater Associates, where he developed most of his investment management skills earlier in his career. Daniel is also an equity research instructor for Wall Street Prep.

He holds an MBA in Financial Instruments and Markets from New York University's Stern School of Business.

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On Seeking Alpha, DM Martins Research partners with EPB Macro Research, and has collaborated with Risk Research, Inc.

DM Martins Research also manages a small team of writers and editors who publish content on several TheStreet.com channels, including Apple Maven (thestreet.com/apple) and Wall Street Memes (thestreet.com/memestocks).

Disclosure: I am/we are long AAPL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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