Gene Munster, Deepwater Asset Management managing partner, joins CNBC’s “Squawk Box” to discuss Warren Buffett’s praise of Apple, the company’s stock outlook, and more.
For the March quarter, Apple beat estimates and revealed that its active base grew in the quarter to over 2 billion devices.
Gene Munster for Deepwater Asset Management:
Apple’s earnings press release led with the Cook quote on the active device growth, and CFO Luca Maestri mentioned it twice in his prepared remarks. In the Q&A, the topic came up in 4 of the 12 questions.
Apple did not report the base’s growth rate as they did in the December quarter (up 8%), but they did report it grew which is impressive given products revenue was down 4.6% y/y in March. That means more Apple customers are adding devices, and many of the devices that get turned in/resold are being refurbished and sold to first-time Apple customers. The used Apple device story is emerging as the company’s avenue to target the most price-sensitive smartphone buyer. While Apple does not directly benefit from the sale of a used device, there is a long-term revenue opportunity of selling services and capturing hardware upgrades in future quarters.
I believe we are entering a new chapter in how investors view Apple. Over the next five years, I expect investors will increasingly see Apple as a can’t live without consumer staples company. The stock’s reaction to a soft June revenue guide is the latest evidence that this investor shift is happening. The Apple flywheel is alive and well, following a 20-year success story in which consumers buy one Apple product, fall in love, buy another product, add a service, upgrade, and repeat.
MacDailyNews Take: The (unenacted and never signed) Law of Large Numbers was meant to be broken by Apple.
Bottom line: Apple stock is a buy, even more so at the current deep discount. Apple has much headroom to grow into, especially in services and – ahem! – new products in new markets (AR/VR headset, AR smartglasees, EVs, etc.). – MacDailyNews, January 25, 2022
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The post Gene Munster: Apple can continue to grow its active installed base, now over 2 billion devices appeared first on MacDailyNews.
