Sounds crazy at first but think about it. The #1 goal with no longer reporting unit sales is so Apple investors no longer view Apple as a 100% hardware company. Apple wants to be know as a Software/Services company that also sells great hardware.
- Apple announces the end of Unit sales reporting. And do a real bad job at explaining it.
- This would anger investors who view Apple as a 100% hardware play. Causing this class of investors to sell their shares.
- Those who view Apple as an ecosystem/services play are not disturbed by the end of unit reporting. Because to these investors install base and services revenue per user is much more important.
- Stock takes a hit. This allows those who believe in the Services narrative to buy shares at a discount. Also allows Apple to buy more shares.
- Once all the ‘hardware’ investors are out of Apple the stock can form a strong base.
- In a couple years services revenue should be about 25-30% of revenues. That will easily justify a PE ratio of 25 versus 18 currently. That alone with buybacks could move the stock price to $400 in a couple of years.
This was a really smart move by Apple.
And this has been in the works for YEARS. Apple Watch was released over 3 years ago. And Apple has never released quarterly unit sales on Watch. My guess is they knew they were going to stop report unit sales for all product lines in the near future.
Apple wants investors to focus on the Razor/Razor blade narrative. Apple sells Razors (iPhones) to a customer once every 2 or 3 years. But sells Razor blades (services) dozens of times a year. So even if Razor sells are down, the more important thing is Razor blade sales are growing. But this narrative would never gain ground if the majority of Apple investors view Apple primarily as a hardware company. Thus Apple is pulling the band-aid off. Current Apple investors can either change their investment thesis (Apple is now a services company) or sell their shares.
Disclaimer: Consult your financial professional before making any investment decision.
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