1: Investors expectation apple to be first trillion Doller market Cap company
2: Apple iPhone 10th anniversary set apple fans high expectation from iPhone 8
- High expectation could lead short term strong pull back
- long term apple bull thesis remain intact.
Apple investors and fans waiting for long time for new iPhone 8 launch. This launch is special because of iPhone 10th anniversary.
Investors and apple fans expectation is high because of that event. Even though apple has other market leading product, iPhone is the apple flagship product. This product brings more than 60% of apple revenue.
Though Apple service sector is growing, most of the people still knows apple for its iPhone.
Successful launch of iPhone 8 will help apple to go $1 Trillion market cap as a first public company of the world. Apple can achieve this status by successful launch of iPhone 8.
Apple just need 20 to 25 % upside move to achieve the status of first Trillion-dollar company of the Planet. This is very much possible by launching the successful IPhone 8 launch.
Apple PE is only 18, which is even lower than PE of S&P 500, A market index. S&P 500 PE ratio is 24 currently.
Investors can expects apple PE ratio up to 24 is not overvalued. From fundamental stand point, Apple is not even overvalued as its PE is still lower than major market index.
Another point is apple service is growing rapidly, year over year which will make apple a service company again.Investor wants to pay higher price for service related company. Service company generally has higher PE ratio than other company.
Now let’s look at the chart of the apple.
Apple daily chart seems to look ugly at first sight because of its last week sale from all time high 164.94.
This happens because lot of the professional firms including hedge fund, pension fund, mutual fund has a big holding of apple stock. Institutions want to reduce their position before the launch of iPhone 8 if iPhone 8 is not as successful as everyone is expecting.
In other words, they want to reduce stress over expectation of iphone launch effects.
As we look deeper down to the aapl chart, we see aapl original support is at 155ish, if aapl price break below this level. Investors and traders should worry about apple investment in the short run.
In the long run, apple bullish case is still intact even though we can see a short term pull back in aapl chart after iphone 8 is launch because of over expectation from iphone 8.
IPhone 8 launch positive response could make aapl first Trillion-dollar market cap company in the world.
On the other hand, negative reaction could send a sharp pull back to the short-term period. This pull back could be as high as 10 %.
However, traders should watch at the price action @155, break down below this level may send apple stock to the $145 or even to the $140.