Apple Looks To Boost Online Sales With 'Beats By Dre'

Apple Looks to Boost Online Sales with ‘Beats By Dre’

By almost any measure, the last two years have been troublesome for Apple, Inc.  AAPL.  Ever since the stock started to fall from its $700 per share peak, most of the market has looked for people to blame in an attempt to find explanation for why the company has lost its central position in the financial spotlight.  Most of this criticism has been directed at CEO Tim Cook, who has had trouble gaining the market’s confidence after the death of Steve Jobs in late 2011.  Peak prices in Apple’s market valuation came shortly after but in the time since, those bullish on the stock have had trouble gaining positive traction.

Currently, we are trading around $590 per share which is a good deal better than the sub-$400 lows that were seen in mid-2013.  For many this might seem encouraging.  But the real source of encouragement should be found in the company’s quarterly earnings performance, which easily surpassed the market’s consensus estimates.  This is essentially a measure of validation for the slow upturn in investor sentiment with respect to the stock price since it has made its attempt to recover from its lows.  

Next Path Forward for Apple and Dre’s Beats

Recent news has been nothing short of stellar.  “On the revenue side, Apple surpassed market estimates by roughly $2 billion,” said Ryan Holden, markets analyst at Orbex, “which is highly unusual to say the least.”  There are plenty of publicly traded companies that do not even have a total market cap that is equal to that figure, so there is real reason here to get excited and expect another long term test of the all-time highs.  For these reasons, drops in the AAPL stock price should be viewed more as new buying opportunities, as the path from here should show market valuations that steadily proceed higher.  

From an earnings perspective, the latest quarterly results all but confirm this outlook.  From a strategy perspective, Apple needed this type of performance result in order to buy time for Tim Cook un revealing the company’s next major product innovation. By some accounts, this could come as early as next month and it will be critical for the embattled CEO to present the next items in a way that regains some of the attention that has been lost since the reign of Steve Jobs came to a conclusion.

Additionally, it will be important to watch the ways Apple looks to capitalize on relationships with Beats By Dre.  No deal has been finalized here but it is looking as though the partnership between the two entities will allow Apple to grow its online revenue streams in areas that circumvent (and reach different consumer demographics) when compared to the company’s already established iTunes offering.  Look for new headlines relating to this emerging relationship, as there is reason to believe we will see some interesting developments in the coming weeks.