Shares of Apple Inc (NASDAQ: AAPL) has taken a beating in the recent market sell-off, spearheaded by tech stocks. At its annual shareholder event Tuesday, the company assuaged concerns by answering a slew of questions in the Q&A session.
Here are the key questions asked and Loup Venture's Gene Munster's take on Apple's responses.
1. Diversification of Supply Chain: Apple said it's committed to contributing $350 billion to the U.S. economy.
Given that Apple did not give any specifics on diversifying away from its China supply chain, Munster expects the shift away from China will happen at a glacial speed. Down the road, other countries will play a bigger role.
2. M&A Strategy: Although Apple did not give a reply to the prospect of any future acquisitions, Munster said the company is likely to be confident in internal innovation and may not be looking at any big-ticket buys over the next few years.
Related Link: Why Apple Will Hit A Trillion Market Cap By The End Of 2021
3. App Store Business Model Changes Following Regulatory Scrutiny: CEO Tim Cook said regulatory scrutiny is reasonable and that the company doesn't have a dominant share in any of the markets it competes in.
Munster said Apple has fared better relative to its big-tech peers by making proactive changes to the App Store.
"While not out of the woods, they're on track to emerge largely unscathed," said Munster.
4. Dividend Increase: Loup Ventures expects Apple to increase dividends and buybacks when it reports its financial results for the March quarter. The company ended December 2020 with $84 billion in net cash.
5. Stimulus Impact On Business: When asked how new stimulus measures will impact Apple, Cook preferred to strike a generic tone, without speculating on the impact on Apple.
Munster expects a small benefit for Apple in 2021, although believing the benefit is already reflected in the 21% consensus growth forecast for fiscal year 2021.
6. Challenging Obstacle In 2021: Munster does not see Apple being challenged from a product or competitive perspective in 2021. However, continued rotation out of big tech could weigh down on Apple's shares.
"Even if that happens, we expect investors to return to Apple given its foundational position in the future of tech," Munster said.
Munster is positive on the company, given it is well-positioned to capitalize on the accelerating digital transformation. The analyst maintained his long-term view of the stock moving toward the $200 level.
Apple shares closed down 0.4% at $125.35.
