Keeping an eye on Apple

Important news and key indicators

Следим за компанией Apple

AppleAAPL$169.76BuyService in partnership with Tinkoff Investments. Quotes are updated every 15 minutes

Branch: computer technologies, storage and peripheral devices
Sector: information Technology
Ticker: AAPL
Country: Usa 🇺🇸

Table of contents

  • About company
  • Organizational structure
  • Assets
  • Segments
  • Key operating and financial indicators
  • Why Stocks Can Go Up
  • Why Stocks May Fall
  • Dividend policy
  • What is important to know right now
  • What we wrote earlier about this company

📍 About the company

Apple (NASDAQ: AAPL) is an American technology company, which develops and manufactures mobile devices, tablets, software, computers and other gadgets. In 2018, Apple became the first U.S. company to be worth over a trillion dollars.. Apple's Current Value, in 2022, close to $3 trillion.

👥 Organizational structure

Like many other large American companies, Apple has no shareholder, who would solely own 50% authorized capital of the company.

The main owners of the company's shares are institutional investors and mutual funds, their total combined share is about 55%. Apple's share capital structure is as follows:

  1. Institutional investors — 28,68%.
  2. Mutual Funds - 26,12%.
  3. In free circulation - 45,2%.

10 Apple's largest shareholders 1 April 2022

Number of shares Share in the company
The Vanguard Group 1 196 152 755 7,33%
Berkshire Hathaway 907 559 761 5,6%
BlackRock Fund Advisors 675 688 994 4,14%
SSgA Funds Management 633 115 246 3,88%
Fidelity Management & Research 316 920 361 1,94%
Geode Capital Management 264 351 901 1,62%
T. Rowe Price Associates 223 148 792 1,37%
Northern Trust Investments 190 876 014 1,17%
BlackRock Investment Management 114 637 678 0,7%
Morgan Stanley Smith Barney 104 631 035 0,64%

🏭 Assets

Apple is a modern technology company, therefore, its main intellectual property is digital assets: Services, services and technologies. The company designs and develops almost all of its own products: from hardware and operating systems to various applications and online services.

But Apple is not involved in the final assembly of technological products., and outsources to its partners, located in Asia, except for the production of some Mac models: their assembly takes place in the USA and Ireland.

Apple production chain on the example of the iPad segment

Следим за компанией Apple

📦 Segments

Apple's manufacturing activities are divided into 5 large segments: iPhone, Mac, iPad, "Services" and "Other Gadgets and Accessories". Let's take a closer look at each of the segments.

iPhone. Main segment of the company, which brings more 50% of total income. The company sells a line of smartphones based on the iOS operating system.. Major sales go through 3 customer interaction channel: own retail network of Apple Stores, partner stores and online orders.

The segment grew rapidly from 2008 to 2015 on the back of strong customer demand, and from 2015 to 2020 decreased by 15% due to increased industry competition from manufacturers from China: Xiaomi и Huawei. In 2021, Apple managed to break the negative trend of the latter 5 years and set new sales records.

Mac. Design and implementation of Mac personal computers and MacBook laptops, based on proprietary macOS operating system and M1 line chipsets. The main income of the division comes from the sale of the following products: MacBook Air, MacBook Pro, Mac Pro и iMac.

Since 2009, sales in the segment have been growing annually by 8,2%. At the same time, in 2021 the trend was interrupted., The company increased its revenue by 23% due to rush demand from buyers for the MacBook and iMac line.

iPad. The smallest division of Apple - the development and sale of tablet computers of the iPad line based on the iPadOS operating system. Top selling models include iPad Air and iPad Pro. In 2021, the company completely updated the product line, launching new models on the market: iPad Pro based on Apple M1 chip, as well as iPad and iPad mini.

  Bundle of investment news: holiday season and automation of industry

From a financial point of view, the segment is extremely unstable. For the last 5 years, demand has almost halved, but in 2021, sales again reached the maximum value in terms of money thanks to the renewal of the model line.

«Services». Apple's second-highest-grossing segment, which is closely related to the first. The main financial income the company receives from the following services:

  1. App Store digital content stores in several varieties - for smartphones, Tablets, computers, watch and Apple TV. Here Apple earns on commissions from user payments in applications.
  2. Streaming services: music on Apple Music and movies and TV shows on Apple TV+, and more recently, showing Friday Night Baseball games.
  3. AppleCare is a subscription service for the maintenance of Apple devices..
  4. iCloud - cloud service, where user data is stored.
  5. Licensing of intellectual property to other companies. Judging by the results of litigation between Samsung and Apple, it's a very profitable business.
  6. Apple Arcade is a game subscription service with its own library.
  7. Apple Card - credit cards.
  8. Apple News+ is a digital subscription service for news and magazines..
  9. Apple Pay - cashless payment system.

The company does not stop there and launches new services and applications almost every year.. For example, at the end of 2020, the releases of the Apple Fitness + fitness service and Apple One took place - a single subscription to the company's services.

Unlike the first segment, sales of the Services segment have been continuously increasing for the past ten years due to the growth of the user base and the annual launch of new services.. It is highly likely that this trend will continue in the future., thanks to which the segment will become one of the main engines of the company's growth.

"Other gadgets and accessories". The fastest growing segment, if you compare the results of all departments: for the latest 5 years, revenue grew by an average of 31,6%. Main points of growth: AirPods и HomePod, whose sales have increased from 15 up to 85 million and from 4,2 up to 14.8 million devices respectively. Other key products of the segment are the Apple TV set-top box, apple watch smart watch, Beats headphones and iPod touch music player.

Следим за компанией Apple

LAST UPDATED: 5 APRIL 2022 📊 Key operational and financial highlights

Revenue - consists of sales 5 major segments, which we discussed in detail in the previous section..

EBITDA - profit of the company before deducting interest on loans, income tax and depreciation on major intangible assets.

Net profit - income from activities after payment of all mandatory expenses from it. The indicator reflects the results of work and allows you to assess further growth prospects, company dividends and buyback.

EV / EBITDA – shows the ratio of the company's value (enterprise value, EV) to its pre-tax profit, interest and depreciation (EBITDA). The multiplier allows investors to identify, How long will it take to earn back the investment in the company?.

P / E one of the most popular investment multipliers, which shows the ratio of the total capitalization of the company to its net profit. Its value reflects the term, for which the money invested will fully pay off. For example, P / E, equal 5, means, what will it take 5 years.

net debt / EBITDA - multiplier, which shows a company's debt load relative to cash flow minus depreciation, interest and taxes.

Net cash position (net cash position, NCP) - the difference between the amount on the company's accounts and its financial liabilities. Accepts as positive values when money covers liabilities, and negative values ​​in case of their deficiency.

What's changed in the new report

Revenue ↑ +11% Powerful Mac and Services Segment Results
Operating profit ↑ +24% Excellent sales in the USA, Europe and China led to double-digit growth in operating income and EBITDA
EBITDA ↑ +22%
Net profit ↑ +20% An increase in the effective tax rate slightly reduced net income growth relative to operating income and EBITDA
Net debt ↑ +13% Apple slightly increased its leverage on the back of rising debt on bonds and a slight decrease in free cash flow
Free cash flow ↑ +4%
Net cash position ↓ −5% Accelerated share buybacks and growth in net debt led to a decline in net cash position
  How and why the volume on the American stock market is falling?

Powerful Mac and Services Segment Results

Key operating indicators, million pieces

2017 2018 2019 2020 2021
iPhone Sales 216,7 217,7 187,2 196,9 242
Mac Sales 18,9 18 17,5 20,2 25,7
iPad Sales 43,7 43,5 45,2 71,1 57,8
Users of the services, million people 200 325 480 620 745

Sales geography, billion dollars

2017 2018 2019 2020 2021
America 96,6 112,1 116,9 124,6 153,3
Europe 54,9 62,4 60,3 68,6 89,3
China 44,8 51,9 43,7 40,3 68,4
Japan 17,7 21,7 21,5 21,4 28,5
Rest of Asia 15,2 17,4 17,8 19,6 26,4

Financial results, billion dollars

2017 2018 2019 2020 2021
Revenue 229,2 265,6 260,2 274,5 365,8
EBITDA 71,5 81,8 76,5 77,3 120,2
EBITDA margin 31% 31% 29% 28% 33%
Net profit 48,4 59,5 55,3 57,4 94,7
net debt 83,4 76,6 53,2 69,4 83,8

Dynamics of key multipliers

2017 2018 2019 2020 2021
EV / EBITDA 12,30 11,73 13,42 28,59 19,80
P / E 16,46 14,83 17,61 37,31 24,26
net debt / EBITDA 1,17 0,94 0,70 0,90 0,70

📈 Why Stocks Can Go Up

Industry leader and innovator. Apple is the world's leading technology company, which in addition to the production of smartphones, computers and tablets masters new directions. Last year, the company announced, that by 2025 plans to release its own electric car, and by the end of 2022 — enter the AR market.

The power of the brand. Apple has the most valuable tech brand in the world, its approximate value is 612 billion dollars. In the overall rankings, Apple is in second place right after Amazon, which is estimated at 683.9 billion dollars.

The value of technology brands in 2021, billion dollars

Apple 612
Google 458
Microsoft 410
Tencent 241

612

Outstripping growth. For the last 5 years, Apple shares showed more interesting dynamics compared to the market. On average, the company's quotes grew annually by 40,9%. There are two reasons for this success.: strong sales in 2020 and 2021 and huge volumes of buybacks from the market (buybacks).

Следим за компанией Apple

Financial stability. According to the reports, at the end 1 Apple has more than $200 billion in financial cushion in Q2 2022. With this money, the company can survive a short-term crisis., which means, in the coming years, investors have nothing to worry about.

Buffett effect. Warren Buffett is one of the most famous portfolio investors in the world., whose fund has the second largest share of Apple stock. At the same time, Buffett is constantly increasing his own stake in the company., buying out strong drawdowns. For example, in 1 In the quarter of 2022, the number of Apple shares held by Berkshire Hathaway increased from 887 million to 907 million..

Medium-term prospects. The nearest 5 For years, Apple plans to improve financial performance amid the growth of the smartphone market, on which the company earns more 50% from their total income. From 2013 to 2021, Apple outperformed its competitors by nearly double the sales revenue..

General smartphone market, billion dollars

2020 423,59
2021 481,2
2022 463,3
2023 481,79
2024 470,07
2025 487,72
2026 504,85

423,59

📉 Why Stocks May Fall

Claims of regulators. Apple faces dozens of lawsuits from government regulators every year. So, EU accuses Apple of violating antitrust laws, The Netherlands asks for changes to the App Store payment policy, Germany and the UK are conducting antitrust reviews in connection with the dominance of the Apple ecosystem, and US lawmakers demand full access to the Apple Pay payment system.

High revaluation. Apple's current animators are not attractive, despite the fact that from 2016 to 2019 they were much more modest. The main reason for the increase in expectations is strong sales in 2021, the dynamics of which is now significantly higher than the average historical values. In 2021, revenue increased by 33%, and from 2016 to 2020, on average, it annually added only 4%.

  Fund of funds (FOF)

Constant conflicts. Apple is on bad terms, not only with regulators, but also with other companies. So, in 2021, the most notorious proceedings were: Epic Games lawsuit, Spotify v. Apple, claims of major social networks after the change in Apple's privacy policy.

Semiconductor Industry Crisis. Global semiconductor shortage hurts electronics manufacturers, who have to reduce production volumes and raise prices for their products. How do you understand, Apple's crisis also did not bypass.

💸 Dividends and buybacks

For the last 10 years, Apple paid a total of $631 billion to shareholders in the form of dividends and through buyback of shares. It's practically 25% from the current capitalization of the company.

Apple actively shares profits with shareholders for two main reasons. The first is Trump's tax reform, the main beneficiary of which was Apple. Thanks to the reform, the company regained its income from outside the United States by reducing income tax from 35 to 20%. The second reason is a significant amount of free money in the accounts..

Dynamics of profit distribution Apple, billion dollars

Buyback Dividends Total payout
2018 73,1 16,2 89,3
2019 67,1 16,9 84
2020 72,5 17,7 90,2
1к2021 24 6,5 30,5
2к2021 19 3,7 22,7
3к2021 22,5 6,5 29
4к2021 20 4,3 24,3
1к2022 20,4 6,6 27
Total 484,5 146,5 631

Apple Cash Position, billion dollars

Free money Debts Net cash position
2018 237 114 123
2019 206 108 98
2020 192 112 79
1к2021 196 112 84
2к2021 204 122 83
3к2021 194 122 72
4к2021 191 125 66
1к2022 203 123 80

🚨 What is important to know right now

Production was reduced due to weak demand. 28 March, Nikkei Asia reported, that Apple will cut the production of new iPhone SE by about 2-3 million units in the first quarter of 2022 and the production of AirPods by 10 million units throughout the year. Probably, the company made this decision not only because of the lack of chips.

Recently, for various reasons, the prices of many goods have risen sharply.. For example, in the first three months of 2022, gasoline in the United States has risen in price by almost 30%, to record 4,25 $ per gallon. Apple fears, that consumer demand will fall in the face of rising prices. Probably, the average American will first fill up his car, and only then spend money on a new and expensive gadget.

iPhone may be sold by subscription. Bloomberg said, that Apple is planning to launch subscription-based iPhone rentals. Users will be able to pay for gadgets as a service like iCloud.

Subscription iPhone will help Apple increase regular cash flow, which is currently generated by App Store services, Apple Music, Apple Pay and others. This flow allows companies to show stable and expected financial results.. Investors love certainty, therefore, Apple shares may rise if a new subscription is launched.

Factory in China reopened. 14 March Foxconn, which collects Apple gadgets, Suspended work due to the outbreak of COVID-19 in Shenzhen, China. Within a week, 21 Martha, the factory is running normally. In the event of a prolonged quarantine, Apple would have to move the assembly to other provinces or even reduce production..

COVID-19 has already affected Apple's financial results in the second half of 2021. So, in a report for the third quarter, CEO Tim Cook said: Apple misses $6 billion in revenue due to factory closures and chip shortages. Only at the beginning of 2022, according to Tim Cook, supply situation began to improve.

🔖 What we wrote earlier about this company

  1. Apple stocks have renewed their maximum, despite production problems.
  2. Apple reduces the production of new iPhones due to a shortage of chips.
  3. How Apple shares usually trade before and after the presentation of the new iPhone.
  4. Apple vs Epic Games: claims, Courts, consequences.
  5. Apple financial results for the third quarter of 2021.
  6. New iPhone released, and Apple shares fell.
  7. Apple earned 11.5 billion, and capitalization grew to a trillion dollars.
  8. Apple's profit rose by 25% in the second quarter of 2018.
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