iPhone 8 anticipation drives Apple stock
On May 8, 2017, Apple’s (AAPL) stock price rose 3% and crossed the $153 mark. Apple was the first company to have a market capitalization in excess of $800 billion.
Investors were bullish about the company as it beat analyst estimates in fiscal 2Q17. In addition, analysts expect the highly anticipated iPhone 8 to drive revenues beginning in September 2017.
In February 2015, Apple’s (AAPL) market cap touched $700 billion for the first time. However, sluggish macroeconomic conditions and declining sales in China negatively impacted Apple’s revenues. The company’s stock fell 3% YoY in 2015. In February 2017, Apple again touched $700 billion in market cap, mostly due to stable revenues and growth in its Services business.
Apple stock has risen 32.3% since the start of 2017. September 2017 will mark the ten-year anniversary of the launch of the first iPhone. Apple is reportedly producing the iPhone 8 with a curved OLED screen. According to supply chain reports, Apple has asked suppliers to expand their OLED production capacity.
Warren Buffett backs Apple investment
Berkshire Hathaway’s (BRK) Warren Buffett has stated that the iPhone commands a high level of customer satisfaction, loyalty, and retention. According to Buffett, customers are not affected by price in the smartphone market and are willing to pay a premium for a better user experience.
Buffett explained, “You can’t move people by price in the smartphone market remotely like you can move them in appliances or all kinds of things. People want the product. They don’t want the cheapest product.”
However, iPhone sales have declined in developing markets like China where cheaper domestic products have eaten into Apple’s market share since fiscal 2Q15.