During a wild April that has so far seen the company lose – then gain – billions in market cap, predicting Apple 's future has become one of Wall Street's riskier adventures.
The iPhone maker's stock price soared more than 8 per cent on Wednesday, the day after Apple once again posted blockbuster quarterly earnings numbers that beat analyst expectations. In the two weeks leading up to Apple's earnings announcement, however, the stock had taken a beating, losing more than 10 per cent of its value as some investors worried the company could simply not maintain its meteoric trajectory and satisfy lofty expectations.
So far, it has. Still, some observers are starting to muse about when Apple's multi-year ride of record-breaking performance will come to an end – something that's particularly difficult to do when the company continues to post superlative numbers.
On Wednesday, Forrester Research CEO George Colony posted a note comparing Apple to Sony , saying the company is headed for a decline in the next two years, following the death of its co-founder Steve Jobs.
"When Steve Jobs departed, he took three things with him: 1) singular charismatic leadership that bound the company together and elicited extraordinary performance from its people; 2) the ability to take big risks, and 3) an unparalleled ability to envision and design products," Mr. Colony wrote.
"Apple's momentum will carry it for 24-48 months. But without the arrival of a new charismatic leader it will move from being a great company to being a good company, with a commensurate step down in revenue growth and product innovation. Like Sony (post Morita), Polaroid (post Land), Apple circa 1985 (post Jobs), and Disney (in the 20 years post Walt Disney), Apple will coast, and then decelerate."
But even if Mr. Colony's prediction is accurate, investors who turn sour on the company now may still miss out on several quarters of revenue and stock price gains, as Apple continues to make money off its industry-leading iPhone and iPad lines.
Indeed, even while some investors were bailing on Apple earlier this month, several analysts raised their price targets on the company's share. That trend continued on Wednesday, as RBC Capital Markets analyst Amit Daryanani boosted his Apple target to $700 (U.S.) from $675. Canaccord Genuity analyst Michael Walkley also raised his price target to $775 from $740.
Both analysts pointed to the slew of products expected from Apple later this year -- most notably, the newest version of the iPhone, but also a refresh of the Mac computer line and even a potential product aimed at the TV market. In addition, the company plans to roll out its new iPad in a number of large markets later this year, including China.
But those who aren't as bullish on Apple point out that, even as Apple sells millions of phones and tablets, the fastest-growing portion of the mobile device market is made up of gadgets running on Google's Android operating system.
The concern among some analysts and investors isn't only that the competition may have caught up to Apple's once-groundbreaking products (in truth, even though some high-end phones from Samsung, Motorola and Nokia, among others, have begun to match the iPhone in terms of technological and design standards, Apple makes far more money every time it sells a phone than any other company does). In addition to market share, some observers fear that Apple may also lose its ability to control its relationship with carriers, now that those carriers have more options in the high-end smartphone market. Indeed, the influx of new competitors in the smartphone market may lead to myriad ripple effects on everything from carrier subsidies to the price of chipsets.
Complicating matters further is Apple's history with analysts. For several quarters, the company has often easily beaten analyst expectations for its earnings numbers. That's partially due to the fact that Apple itself has a history of posting extremely conservative guidance for upcoming quarters, so that even if analysts overestimate that guidance, they still underestimate the actual results. In turn, Apple's share price tends to jump considerably after it posts those street-beating numbers.
After a brutal month, Apple's share price was only about $10 away from its all-time high by Wednesday afternoon, making up most of the losses of the past two weeks. The company may see some significant share price moves later this year, when it announces its new phone and when it posts its next set of quarterly results in the summer – at which point it will provide more details of the dividend it will pay investors.
For those investors, the key challenge over the next year will be determining just how sustainable all this growth really is. If last week's stock market bloodletting was any indication, some investors are already starting to become concerned about a potential Apple plateau. But to act on that concern now risks missing out on even more potential blowout quarters like the one Apple posted on Tuesday.