Apple Reclaims $1 Trillion Market Cap

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Apple reaches $1 trillion again after its iPhone 11 reveal…

Following the company’s iPhone reveal event on Tuesday, Apple stock increased by more than 3% on Wednesday. With this jump, Apple reclaimed its status as a $1 trillion company. Apple shares have increased by about 40% so far in 2019.

Apple previously reached this benchmark in 2018. However, the company’s value fell following disappointing international iPhone sales in late 2018.

This milestone is particularly impressive as Apple bought back millions of its own shares, meaning the stock price target for this market cap is higher than before.

It’s a major milestone, but Microsoft still maintains a larger market cap than Apple at $1.04 trillion.

Lower Pricing

One highlight of Apple’s Tuesday event was the lower-than-expected price of the iPhone 11.

The iPhone will sell for $699. Compare that to the $749 iPhone XR, which is the model that the iPhone 11 is replacing.

In previous years, Apple pushed pricing limits by selling the iPhone X for $1,000. But that price point proved to limit demand in major emerging markets. Apple found success in these markets by offering the iPhone XR at a lower price. On the success of the iPhone XR, CEO Tim Cook stated that the phone “became the most popular iPhone and the most popular smartphone in the world.”

That may suggest that iPhone 11’s lower price can have a positive impact on Apple’s international sales. The new iPhone 11 also has an improved camera, a faster processor, and faster batteries — all of which could contribute to sales growth.

Apple TV+

Aside from the company’s new phone lineup, Apple revealed more details about its streaming service, Apple TV+. The service will start at $4.99 per month. And Apple will give users a free year when they purchase an Apple device. So the low price point makes Apple’s streaming service more accessible and can also strengthen the Apple ecosystem.

Apple TV+ is cheaper than its streaming competitors, like Netflix and the forthcoming Disney+ … But Apple TV+ won’t have as much content as its rivals — it will only stream original shows.

This holiday season, Apple expects to sell around 70 million iPhones. That means roughly 70 million consumers could have one free year of Apple TV+. As such, the company’s streaming service could gain a massive subscriber base very quickly. This doesn’t account for sales of other Apple products.

While Apple TV+ is unlikely to have a serious impact on the company’s near-term financials, it has the potential to become one of the biggest streaming services on the market, according to analysts…

Bernstein analyst Toni Sacconaghi stated, “Apple TV+ could accumulate tens of millions of paid subscriptions by the end of 2020 — potentially making it larger than Disney+.”

Analyst Optimism

Apple’s event on Tuesday did a lot to boost analyst optimism. Specifically, analysts seem generally pleased by the low prices of Apple’s new products and services.

Morgan Stanley analyst Katy Huberty stated that the new Apple Watch and iPhone lineup should boost revenue growth during Apple’s 2020 fiscal year.

Needham analyst Laura Martin raised her price target for Apple to $250, citing Apple’s transition from a hardware company to a business model that includes hardware and content. Other analysts seemed to share these sentiments regarding Apple’s future growth.

While the long-term impact is yet to be seen, the low prices of Apple’s new iPhones and Apple TV+ may have a positive impact on sales and revenue growth in the coming months.

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