Apple’s Surging Stock Price Attributed to Services Push

Jeran Wittenstein, reporting for Bloomberg*:

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.

* You know.

Monday, 6 January 2020