Apple Inc. (NASDAQ:AAPL) had a tremendous run in 2014 in the wake of unveiling iPhone 6 in September that saw the company clock highs in terms of valuation. In contrast to the impressive run in December 2014; the stock could be in for a downward trend this month if history is to be carefully studied according to BGC Technology analyst Colin Gillis
During an interview on CNBC, Gillis reiterated that Apple Inc. (NASDAQ:AAPL) impressive run in 2015 may be suppressed on the fact that iPhone sales don’t offer a recurrent revenue stream. The senior analyst also believes that Google Inc. (NASDAQ:GOOGL) may in a way outshine the Cupertino-based company in terms of performance this year.
“You go back and you look at the last two Januaries when they report record December quarter results. The stock has traded down. Traded down 8% in January of 2014, traded down 12% January of the prior year. The reason is that expectations are already baked in,” said Mr. Gillis
Apple Inc. (NASDAQ:AAPL) is poised to sell 60-70 million gadgets with the current refresh cycle according to Gillis but with great concern that the company does not have any recurrent revenue avenue. A lengthening of refresh cycle to two years would negatively affect the company’s annual revenue going forward.
The analyst also believes that the impressive run that Apple Inc. (NASDAQ:AAPL) has enjoyed in the recent past has to do with the massive repurchase program that has gone to impact its earnings per share. The analyst expects the buyback program to at some point come to an end something that should have negative repercussion on the stock’s performance in the market.
Apple pay is expected to facilitate device sales going forward as more consumers continue to trust Apple Inc. (NASDAQ:AAPL) products especially on the security aspect. Gillis, on the other hand, remains skeptical on whether Apple Pay will be a meaningful driver in driving sales going forward.
“It is a great facilitator for sales of the unit itself to help sell handsets, but to actually be a meaningful contributor to revenue. They will need to do about 14 trillion dollars in sales just to be 10% of revenue, and that is not going to happen,” said Mr. Gillis
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