Apple Needs More Fantasy Products/Projects To Satisfy Impatient Investors
Not only is Apple the biggest company in the world but it is also the most scrutinized. On any given day you can read dozens of new stories on the stock performance alone. Its crazy and no other company has to endure anywhere near the amount of absurd conjecture that the media coughs up about every facet of their business.
But I believe that Apple is partly to blame for the frenzy that surrounds the stock, especially leading up to and after their quarterly earnings call. This is because Apple is just too transparent in the numbers it reports and it doesn’t have enough mystery that investors can fantasize about.
For instance, Google makes the vast majority of its income from its search business and it has YouTube which might soon become a big contributer to the bottom line. But after that, what does the company really have other than a lot of mystery? They have Android that doesn’t contribute meaningfully and a lot of divisions (Alphabet) that most investors know little to nothing about. And that is the key: they are unknown and that allows investors to rightly or wrongly build them up in their minds and give them more imaginary value than they are really worth.
Google has a lot of stuff going on behind the scenes and some of that stuff is surely going to amount to some blockbuster products.
That is what I believe many investors feel as they continue to bid GOOG and GOOGL up even though right now all income comes mainly from search advertising. Its the fantasy about the unknowns that are seen through small hints that continues to drive the price of Google up and up.
Where Are Apple’s Fantasy Unknowns?
Apple on the other hand has only one mystery product and that is Project Titan that involves the building of a full fledged electric car or if not that, will be Apple’s software intigration with existing car manufactures. Its a big project and a huge undertaking, no matter what it is.
But that is it. There is nothing else for investors to dream about and build up in their minds and make them want to buy Apple stock in order to get in on the next best thing. So they buy Google stock instead.
There is little doubt that the technology industry is more fun to invest in than just about any other. Investors can buy into companies that produce the products they use everyday and those products are becoming more and more invealuable. Addiction to our devices and the services displayed on those devices has permeated our society. Buying stocks in the companies that produce those products and services is a natural extension of that love for technology.
Apple has the luxury of going slow and methodically plotting its course. Its unprecedented earnings in the last 7 years has given it that luxury. But for investors with anything but a 3 to 5 year time horizon, Apple stock may not be the right choice to buy. The lack of mystique about future offerings from the company means at best a slow and steady ascension for the stock price and not the big pops that we periodically see with Google, Netflix, and Amazon.