At the beginning of 2024, Apple (AAPL, stock price of $184.25, market value of $2.9 trillion) was hit hard. In the first two trading days of the US stock market, Apple's stock price fell by a cumulative 4.3%, and its market value evaporated by about $128.7 billion, equivalent to approximately RMB 920 billion. The culprit behind Apple's tragic decline this time is a negative review report from Barclays.
Barclays believes that iPhone performance will continue to be weak, and the iPhone 16, which will be launched in 2024, will not be more attractive. At the same time, Apple's service business growth is slowing down, and Apple's valuation is high, especially after multiple quarters of weak performance, thanks entirely to the expansion of valuation multiples. Apple has lost an important driving force of the ecosystem, and its growth in the coming years will face great difficulties.
This is a report that breaks one's glasses. Apple, as the world's largest listed company by market value, has always been regarded as an "innovation giant". It became the world's most profitable company thanks to the success of the iPhone. However, reality may not be optimistic. The performance of Apple in 2023 seems to give people a feeling of squeezing toothpaste.
In 2023, Apple's two major products were the iPhone 15 and Vision Pro, which were criticized for lack of innovation. Although the latter was quite impressive, it has not yet been sold on a large scale, generating profits and cash flow, and its driving force on the capital level is limited. Throughout the mobile phone industry in 2023, the iPhone lost its top spot in the world market and was replaced by Samsung. In the Chinese market, Huawei's return has brought great pressure to Apple. If the iPhone, as Apple's "ballast stone", becomes loose, it will inevitably undermine market confidence.
However, no matter how the Apple Vision Pro market ultimately performs, the importance of the iPhone to Apple cannot be replaced. Because the iPhone is not only a hardware product, but also an important entry point into the Apple ecosystem. And Apple's ecosystem is its biggest competitive advantage. In the past decade, Apple's ecosystem has shifted from Mac driven to iPhone driven, and the entire system remains very powerful.
The ecosystem of Apple, from iPhone to Mac, iPad, Apple Watch, AirPods, HomePod, and then to iCloud, Apple Music, Apple TV+, Apple Arcade, covers various aspects such as hardware, software, and services. They are interconnected, mutually reinforcing, and adding value to each other. This is the ecological effect of apples. It makes users inseparable from Apple, developers inseparable from Apple, and partners inseparable from Apple. However, all of this accumulation and growth are built on Apple's innovative capabilities. If Apple loses its innovation capability, its ecosystem will gradually lose vitality.
Barclays predicts that Apple's stock price will fall by about 17% in the next year. The investment value of Apple depends on its long-term growth and profitability. If Apple loses its innovation capability, it will also lose its long-term growth and profitability.
At the beginning of 2024, Apple was bearish by the market, which may be a signal. It may indicate that Apple is facing a critical turning point. This turning point is not only related to the future of Apple, but also to the future of the entire technology industry. Because Apple's success not only changed people's lifestyles and consumption habits, but also changed the overall pattern and rules of the industry. If Apple loses its innovation capability, then everything will change.