Will Apple Ever Recover From the Growth Slump?

Apple (AAPL) stock has been range bound for quite some time as the company is struggling to innovate its way out of a growth slump. Apple's high dependence on the iPhone has proven to be a curse for long-term investors. The stock is trading at a very conservative multiple but it is unlikely for it to be valued higher unless Apple finds a new growth driver.

However, with Apple having $216 billion in cash, I am confident that the Cupertino giant will soon be able to come up with a new product.

Apple car

Apple recently launched its new iPhone SE, and the response was pretty amazing.
The company may be preparing for a new iPhone 7 release anytime in September. Apart from this, Apple is also planning to focus on future products such as its rumoured electric car.

Despite the fact that electric vehicle market still accounts for a very marginal portion of all the light vehicles sold globally, it is growing quickly. Approximately 2.4 million electronic vehicles were sold in previous years, but according to Navigant research, the figure will reach around 6 million by 2024.

It is expected that Apple will launch its first electric car in 2019, which suggests that it could enter the market as Electronic Vehicles are thumping their pace. According to Bloomberg, Electric Vehicles represents just 1 percent of entire sales currently, but it is significant to remember that the electric car market is at its infant stage and holds great potential. Also, in 2019, Apple will have enough room to breed with the rest of the Electronic Vehicle market.

On the other hand, Apple has engaged more than 1,000 employees to work on its car project. Apple has hired some significant engineering including Aston Martin Chief Engineer Chris Porritt. It is highly likely that Porritt will lead the overall car project as a replacement for Steve Zadesky. The company also engaged Jonathan Cohen mainly due to his knowledge regarding advanced driver systems.

The most important advantage that Apple has is its operating system. The company already has a popular touchscreen CarPlay system known as Apple CarPlay. The system is formerly being used in many vehicles, and its actual benefit in setting itself separately in the car market is to create a car OS from square one.

It would possibly have voice-activated feature and can also propose all of the easiness and power that iOS does for iPads and iPhones, but in the car. Apple accounts for the only software company to make a car OS that is more accessible and diverts us less.

Given the hoard of cash that Apple has, it would be unwise to think that it won't be able to innovate its way out of the recent growth slump. Thus, I think Apple investors should continue holding the stock for the long-run.
Published on Apr 22, 2016
By Akshansh Gandhi

Copyrighted 2016. Content published with author's permission.

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