Apple shares have started 2020 with a bang and the giant’s first-quarter December 31 earnings report on January 28 will go a long way to determining if the record-setting start to the year by Wall Street continues.
In fact, it would not be an over-exaggeration to say that the course of global markets over the next few months could be set by the strength or otherwise of the Apple report which investors think will confirm the surge in the company’s share price over the past year.
Apple shares closed at a new record high of $US310.33 on Friday – up 4.3% for the week, 5.7% year to date in 2020 and a huge 104% in the past 12 months.
Apple outperformed the wider market last week and in the past year – for instance, the S&P 500 rose 0.9% last week and the Nasdaq was up 1.8%. Over the year the S&P 500 jumped a very tidy 28% (and 31% including dividends).
Apple’s more than doubling – especially for a mega-cap stock – was dramatic and perhaps the biggest influence on the performance of Wall Street, especially in the closing months of the year.
Apple’s value has, therefore, surged to $US1.36 trillion – well ahead of the other tech giants in Microsoft, Amazon, Facebook and Alphabet (Google).
Helping Apple last week (and remember, Warren Buffett’s Berkshire Hathaway which is the second biggest single shareholder) was the news from the company that its App Store customers spent a record $US1.42 billion during the holiday season, up 16% from the same period a year ago.
The App Store is a key part of Apple’s rapidly growing services business which is the second-biggest sales and earnings group inside the giant after the iPhone.
Marketwatch.com reported last week that Wedbush analyst Dan Ives reckons Apple’s App Store growth has “impressive,” especially when coupled with his belief that Apple finished 2019 selling 67 million AirPods, well above his original estimate of 56 million AirPods.
Ives expects a “strong” December-quarter report when Apple reports earnings on Jan. 28, and he said he believes Apple’s services business is “now starting to be properly valued” by investors. Ives reiterated his outperform rating and $350 stock price target.
But Apple wasn’t the only record-setting mega-cap on last week – Facebook shares touched an intra-day record high for the first time in over a year on Friday.
The shares briefly rose 0.72% to touch $US219.88 at mid-day, its highest level ever, before giving up the day’s gains to finish down 0.11%.
The stock on Thursday achieved a record closing high, topping the last record close seen on July 25, 2018.
Facebook shares rose more than 4% last week and are up more than 51% in the past year. The company’s value ended at $US623 billion, half Apple’s value.