For the first time since 2011, shares of the iPhone maker have
traded at a higher price-earnings ratio than the S&P 500 for
months amid a year that saw the stock’s valuation almost double.
It’s a reversal from the previous nine years, when concerns over a
lack of product innovation kept the stock at a persistent discount
to the market.
Credit the shift in sentiment to Apple’s focus on tapping an
ecosystem of nearly 1.5 billion users to generate a steady stream
of profit. The increasing contribution from services like iCloud
storage and Apple Music is making its business more stable and
therefore deserving of a higher multiple, according to Gene
Munster, a long-time Apple analyst and founder of Loup Ventures.
I hope this is simply good news for Apple (and for those who own Apple shares). 2019 marked a serious push into subscription content services and the credit card market for Apple. My concern, again, is what happens if the drive to increase services revenue takes precedence over Apple’s “Prime Directive”: to put product design and experience above all else.