Guest post by Isaac Sprecher, a financial analyst for kitchenclique.com. He can be contacted at ymsprecher(at)gmail.com
Apple Inc. (NASDAQ:AAPL) has been the hottest company in the world since the launch of the iPhone. In the past few months Apple has gotten an incredible amount publicity, among other reasons, for having the largest market cap, and their unbelievable holiday quarter sales. The stock has risen a 44% since the beginning of the year. The companies revenues are growing rapidly, and they dominate nearly everything in the technology world from Smartphone’s, tablets, and personal computers.
There are two main reasons why the up trend in Apple will likely come to an end sooner rather then later. This article presents a very brief synopsis, focusing mostly on the second reason.
The first is simple logic: there is simply a limited number of people in the world. It is not possible for Apple’s revenue to grow as fast over the next five years as the previous five. Once companies reach a certain size, it becomes almost mathematically impossible to continue growth at a rapid rate.
The second reason is complacency. Everyone is probably wondering how you can call a company like Apple complacent, since it practically outsells everyone and everything. The reasoning is as follows; the new IPAD came without the revolutionary assistant known as Siri. Siri was the hot new invention Apple rolled out for the iPhone 4s as the talking assistant. Siri does not work half as well as the Apple ads make it out to be, and the company is being sued for alleged false advertising regarding the device.
Most people would agree that Siri is not the greatest thing since sliced bread and was never expected to be. However it is a marketing tool which people believed Apple would use for the next generation of devices, such as the Ipad. The absence of Siri is proof that Apple’s pipeline of ideas for future innovation might have finally hit a snag. The new Ipad has a wonderful screen, the interface is great, and the speed is second to none. So what will Apple do next? Add Siri and the Apple fan-boys (myself included) will run out to buy it? The question is really how much longer will people keep on buying new products from Apple with slight upgrades? For this reason alone, there is reason to be skeptical of Apple for the long-term future. Perhaps the fad of Apple will die, bringing the stock price down with it.
In conclusion, Apple stock could easily double from current levels. However the fact that Siri was left out is room for serious skepticism about Apple being able to keep a step ahead of competitors. I currently do not own any Apple shares, but for those that do my advice is proceed with caution.