Apple Inc (NASDAQ: AAPL) is the world’s most celebrated tech giant, and for good reason. Apple is a retail success and it dominates the high-end market of smartphone and tablet users. The stock is currently trading at $111.79 per share (+0.17%) as at October 14, 2015. The stock has a 52-week trading range of $92 on the low end and $134.54 on the high end. At its current share price, Apple has a market capitalization of $637.51 billion. The company’s price/earnings ratio is 12.93 and the EPS is 8.65.
For binary trading analysts, it is obvious that the company has tremendous upside potential, as evidenced by the 1-year price target estimate of $147.37. The high target price for Apple is $200.00. On a scale of 1.0 to 5.0 where 1 is a strong buy and 5.0 is a sell, Apple is listed at 1.9. When it comes to upgrades and downgrades, Apple Inc has recently been upgraded by Wells Fargo from Market Perform to Outperform. Prior to that it was downgraded by Bank of America, Merrill Lynch from a buy to a neutral rating, and by Cowen from an outperform rating to a market perform rating. Global economic weakness and anxiety over a Fed rate hike has made many multinational companies a little antsy.
Investors Welcome India Expansion
The fact of the matter is that Apple Stores generate more per square foot than any other land-based operation for similar products. The reason being: Apple is expensive, and as a high-end brand with luxury items it can generate high profits off individual items. When compared to other luxury retailers like Tiffany’s, Apple Stores are noticeably superior and this bodes well for the company’s share price. Apple is already well established in developed countries, but the costs of its products are largely prohibitive in EM countries like China and India. Fortunately, Apple Inc is already operational in China and news of a high-end Apple Store in India has investors plenty excited.
The manner in which Apple has orchestrated its entry into India is particularly exciting: It is teaming up with Tata and the retail division Croma. The Apple Stores will be stores within stores, but Apple customers will instantly recognize the traditional look and feel of the Apple Stores in India. There remains a degree of uncertainty as to why Apple has opted for stores within stores as opposed to its traditional model. It all boils down to prohibitive rules of FDI (Foreign Direct Investment) in India. Retail investments in the country are governed by strict rules with all sorts of bureaucratic gobbledygook. For the Apple stock to continue on its current growth trajectory it is important that global expansion continues. The move to India is a step in the right direction.
It is clear that Apple Inc, like all other major tech conglomerates is facing an uphill battle. The global economy is in the midst of a major market slowdown spurred by the China equities rout. With trillions of dollars wiped off the Shanghai Composite Index and the Shenzhen Index, it is apparent that consumption is on the decline in China. We are seeing declining consumer sentiment, PMI for services and manufacturing, import and export data from China. The picture is bleak for the world’s second largest economy and this is impacting on the revenue streams of luxury item retailers like Apple Inc. The market slowdown in China will likely drag Apple’s profits lower and India is unlikely to help with increasing Apple’s growth margins in any significant way. The net effect of the China meltdown and the entry of Apple Stores in the Indian market may be negative. This is particularly true given the wealth gap in India. The fact of the matter is that Apple products are simply out of reach for the vast majority of Indians: products like iPads, iPhones and iPod Touch devices are desirable but they are simply too expensive. Indian customers can afford the relatively less expensive Android products and the smartphones manufactured by Google Inc.
Details of Apple Inc’s Plans in India
On October 16, 2015 Apple Inc launched its iPhone 6s and iPhone 6s Plus across India. That Apple did everything in its power to market its brand on the subcontinent is perceived positively by investors. To date, there are 5 distributors for the company including the newly added Optiemus Group and Brightstar. The 3 existing distributors in 2014 included Rashi Peripherals, Ingram Micro and Redington. According to binary trading experts, a 3-tier strategy will be used for distribution purposes. The goal is pretty ambitious: Apple Inc plans to reach customers in 150 cities across India. Pre-orders for the iPhone 6s and the iPhone 6s Plus have already begun and prices are starting at Rs 64,836 for the iPhone 6s and Rs 74,117 for the iPhone 6s Plus.
So far, 6 Apple Stores will be opened up in partnership with Croma in India. One of them will be located in Bengaluru and the remaining 5 will be in located in Mumbai. Apple will also be selling some 12 lac devices from October through December 2015. For the full year, Apple is seeking a sales target of 35 lac devices. Indian consumers are increasingly drawn to the iPhone 6S and 6S Plus. A recent report cited the seizure of some 182 iPhones at the international airport in Delhi. Smugglers are bringing them into India from Singapore, Thailand and Hong Kong among others. Such is the demand for iPhones in India and China that Chinese men purportedly attempted to sell their organs in order to purchase the iPhones. With such strong demand, it is no wonder that Apple is attempting to give the India launch a massive push.
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