Munster: The path to Apple unit sales enlightenment

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Gene Munster has seen the light. Wall Street, he says, will catch up in a year or so.


From a note to Loup Ventures subscribers posted Thursday:

In the past, when Apple entered a major transition, investor optimism initially declined, then stabilized, then improved. This process takes about a year to unfold and has four distinct phases:

  • News: November 1 – The company announced that starting with the Dec-18 quarter, it will no longer report unit sales figures for the iPhone, iPad and Mac.
  • Knee-jerk: We’re currently in the knee-jerk phase. Shares of AAPL are down ~20% since the news was announced on Nov. 1. The pull back was also driven by the broader market downturn, along with negative data points out of Apple’s supply chain related to iPhone demand. We expect the knee-jerk phase to last until early Feb. 2019 when the company reports Dec-18 quarterly earnings.
  • Indifference: After Dec-18 results, we expect investors’ concerns to ease to indifference. Revenue, earnings, and margins will likely be in-line with expectations, a reassuring sign that the iPhone franchise is intact despite the more limited reporting metrics. The indifference phase should linger until Apple reports its Sep-19 quarter in Oct. 2019. Typically, investors will want to see four quarters of stability in order to rule out all possible effects of seasonality before beginning to embrace a new reality.
  • Enlightenment: Late in 2019 and beyond – Investors will slowly credit the company for results in 2019 that support the Apple as a Service paradigm. Rising investor confidence in a more predictable hardware business, additive Services, and new products should result in a higher multiple for shares of AAPL.

My take: Om.

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