What is behind Apple’s rise

The immense price increase is mainly due to the great popularity of Apple products. The company manages to serve a large clientele and still give them the feeling of exclusivity: This is what defines the value of the brand with the bitten apple as a logo.

While Facebook has just renamed itself “Meta” and is in the process of building a virtual world empire with “Metaverse”, Apple has built its empire in the real world with a combination of hardware, software and services.

Christin Kahler, investment strategist at DZ Bank, sees the strong share buybacks as the most important driver for the share price. In his view, Tim Cook understood how to deal with shareholders much better than his predecessor, the legendary Apple founder Steve Jobs. “Cook talked about it with Warren Buffett,” says Kahler. The US investor loves companies with strong customer loyalty, understandable business models and good financial returns. It was no coincidence that Buffett put aside his aversion to highly rated tech companies when it came to Apple.

But that also means: Apple is addressing two types of investors. First of all, those who rely on tech values ​​and growth. Despite the size that has already been achieved, Kahler still puts the growth in sales at a good ten percent annually. On the other hand, the share is also suitable for conservative investors who rely on steady returns.

Profit twice as high as in the whole Dax

According to Kahler, Apple has bought back around 35 percent of the shares since 2013. As a result, the debt increased significantly, the equity is almost 20 percent – little for a financially strong group. However, this does not jeopardize the creditworthiness. Kahler says: “Apple earns around 100 billion dollars a year after taxes, that’s about twice as much as all companies in the German share index (Dax) combined.” He adds: “And the quality of the company is higher than the average in the Dax , I would say.”

Apple delivers devices that set standards in terms of design. The app store has become one of the most important platforms in the world. With Apple Pay and Apple TV, the group is also involved in financial services and media. Even in areas where the company lags behind its competitors, such as streaming behind Netflix, its financial power is feared.

Kahler praises the innovative strength of the group and mentions a product which at first glance seems unspectacular but which generates high sales: the wireless earphones.

In terms of products, on the one hand, it is the iPhones that continue to fuel the hype surrounding Apple. The group itself should initially have high hopes for the new iPhone 14. Industry watchers expect it for next year. In any case, the third version of the cheaper iPhone SE, which has been announced for the first quarter, will then come. On the other hand, there are rumors about completely new product categories that drive the enthusiasm for the group even further: These include glasses for augmented reality and, above all, an electric car.

The news agency Reuters reported, with reference to two insiders, that in 2024 an Apple car with “groundbreaking battery technology” is to be produced. A large part of Apple’s development expenditure, however, ultimately flowed into the development of its own chips. Experts believe that they could make Apple products even better. They also complete and secure the empire.

Cook and his people have no hesitation in defending and expanding this empire even with crude means. For example, Apple introduced a new tracking model against protests from competitors, justifying it with data protection. This slows down large platforms like Google, Meta and Snap in their advertising business because they lack valuable data. According to estimates, this costs the industry around ten billion dollars in annual sales.

Cook also exploits the weakness of politics: the regulators have failed to enforce stronger data protection. Now Apple is making the rules – and is getting record ratings for that too. The question remains, however, whether the regulators will leave it that way in the long term.

Hot deal in China

Cook shows little scruples in other areas, as the newsletter “The Information” notes. According to this, Cook had already signed a contract with the Chinese rulers in 2016 that provided for investments totaling 275 billion dollars over five years. In return, he was able to avert threatened tough regulations, it is said with reference to internal documents of the group. In addition, as the newsletter recently added, Apple is working specifically with Chinese suppliers and strengthening their competence and thus their competitiveness, for example with Taiwan Semiconductors.

However, some of these companies produce in the province of Xinjiang, from which there have been reports of serious state crimes against the Uighur population. In addition, this cooperation does not exactly meet the security strategy of the US government, which wants to make itself as independent as possible from China. Against this background, the relatively rude strategy is not without risk.

Apple has had an eventful history. The brand with the apple is at times in big trouble. After the group had slipped to the brink of bankruptcy in the mid-1990s after years of mismanagement, the recovery began in the early 2000s with the production of the very successful iPod MP3 player.

But it was not until a few years later that Apple was able to shake off its reputation as a penny stick with the iPhone: In 2007, the group revolutionized the then still very young smartphone market with the introduction of a touchscreen, which was the first of its kind to be operated with multiple fingers at the same time – during that time As a result, top dog Nokia rapidly lost its importance.

Apple makes more money

As a result, Apple developed into one of the most important smartphone manufacturers in the world. According to data from the market research company IDC, the Korean competitor Samsung, with a market share of around 20.8 percent, is well ahead of Apple with 15.2 percent, followed by the Chinese manufacturer Xiaomi, which has a market share of around 13.4 percent. But the group from Cupertino earns more money than the competition with its devices, which are usually much higher priced.

This also includes other electronic products such as tablets, laptops and smart speakers for a long time. In the third quarter alone, the group turned over around 83.4 billion US dollars. The bottom line was a net profit of $ 20.6 billion.

For the fourth quarter, which is likely to be heavily influenced by the Christmas business, analysts expect excellent figures again. For example, in his most recent study, JP Morgan analyst Samik Chatterjee emphasizes on the one hand increased demand for the iPhone 13 and on the other hand the fact that the group has so far managed to get the industry-wide disruptions in the chip and smartphone supply chains under control.

The industry expert sees the fair value of the stock at 210 US dollars – and is thus still well above the current price, which after crossing the three trillion dollar mark by three percent to temporarily up to 182.88 US dollars had gained.

DZ Bank analyst Ingo Wermann also sees price potential. Shortly before the turn of the year, he raised his target price to 205 US dollars, emphasizing above all the medium to long-term prospects for the group. This means that both analysts are in line with the trend: According to the Bloomberg news service, 38 currently recommend buying the share, while eight recommend holding and two sell.

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