The Motley Fool

Why Apple Stock Climbed 11% in October

What happened

Shares of Apple (NASDAQ: AAPL) rose 11.1% in value last month, according to data from S&P Global Market Intelligence. The stock price has been steadily rising this year on the hopes that strong growth in services and non-iPhone products can pick up the slack on the top line.

With a saturated smartphone market, iPhone sales are not enough to grow the company anymore, but the fiscal fourth-quarter earnings report showed why that shouldn’t be a concern.

So what

The tech titan beat analysts’ estimates for revenue and earnings in the fiscal fourth quarter. Here’s a look at the key numbers:

  • iPhone sales came in at $33.362 billion, down 9.2% year over year.
  • The decline in iPhone was mostly offset by growth in services revenue of 18%.
  • Sales of wearables, home, and accessories climbed 54% year over year to $6.52 billion.
  • Total sales were $64.04 billion, up 1.8% year over year.
  • Earnings per share were $3.03, up from $2.91 in the year-ago quarter.

As CEO Tim Cook was quick to point out on the company’s conference call, Apple’s revenue excluding iPhone increased by 17% year over year. That number was not given to sugarcoat the decline in iPhone sales, as it’s still the largest source of sales for the company. The growth outside of iPhone points to the success Apple is experiencing as management shifts their strategy to monetizing the company’s massive base of users.

Here is how Cook described the momentum in services:

We established new all-time highs for multiple services categories including the App Store, AppleCare, Music, cloud services and our App Store search ad business. We are well on our way to accomplishing our goal of doubling our fiscal year ’16 services revenue during 2020.

Now what

Apple has received a lot of attention lately from its announcements to beef up its services category. Apple TV+ is expected to quickly gain a large subscriber base, since Apple is offering a one-year subscription at no charge to anyone who buys a new iPhone, iPad, Apple TV, iPod touch, or Mac. For those who don’t buy a new device, the $4.99 monthly price should be enough to win some subscribers, since it undercuts competing streaming services.

The Apple Card launched in August and the feedback from users has already been positive. Also, the new noise-canceling AirPods Pro just launched. Cook said during the call that “AirPods just keep hitting new highs.”

All of these services and accessories are a large and fast-growing business for Apple. The combined sales of services, wearables, home products, and accessories totaled $70.8 billion in fiscal 2019, which ended in September. That amount doesn’t include any revenue yet from Apple TV+, which speaks to the opportunity in front of the company, and why the stock is up 62% since January.

This article was originally published on All figures quoted in US dollars unless otherwise stated.

Amazon CEO Shocks Bay Street Investors By Predicting Company "Will Go Bankrupt"

Amazon CEO Jeff Bezos recently warned investors that “Amazon will be disrupted one day” and eventually "will go bankrupt."

What might be even more alarming is that Bezos has been dumping roughly $1 billion worth of Amazon stock every year…

But Bezos isn’t just cashing out, he’s reinvesting his money into a company utilizing a fast-emerging technology that he believes will “improve every business.”

In fact, this tech opportunity could be bigger than bigger than Amazon, Tesla, and Berkshire Hathaway combined.

Get the full scoop on this opportunity that has billionaire investors like Bezos convinced – before it’s too late…

Click here to learn more!

John Ballard owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: short January 2020 $155 calls on Apple and long January 2020 $150 calls on Apple and recommends the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.