Tweet This
With the availability of the iPhone X, reports of long lines at Apple stores have signaled strong demand even though prices start at $999. No one has a better track record making money on Apple than Eugene Groysman, who in 2010 called for Apple to reach his split-adjusted target of $42. Eugene’s 12 month target price is now $250.
Ken Kam: Eugene, you’ve been right about Apple for a long time. What do you think of the latest iPhones?
Eugene Groysman: The launch of the iPhone 8 and 8 plus was met with less than enthusiasm, considering that the long awaited iPhone X was just around the corner.
There was a lot of speculation from all across the internet, with some theories, like that the Face ID would be less than advertised.
However, from the earlier tech reviewers that had the ability to use the new iPhone X, they say its “Beautiful, Elegant and Worth It.”
Kam: Have you upgraded to the iPhone X?
Groysman: I am one of those that pre-ordered the new phone, but this is just to explain why I was at my local ATT store.
I have a business account, and I can’t upgrade through the Apple website nor at my local Apple store. I can however, usually, do it the through my ATT online account, which was not working (I will not get into that frustration), but on October 27, I had to go into the store.
While going through my upgrade procedure with my very friendly ATT sales rep, she mentioned something interesting. She said that she had an unusual number of people come to upgrade their phone who had the most recent iPhone 8 or 8 plus.
I thought that was very confusing, and so I did a little checking on line, and it was true. There was a large uptick in the volume of people who had upgraded to the 8 only to come back in a re-upgrade to the X.
Kam: What would this mean for Apple’s stock?
Groysman: Simple, Apple is double dipping in the same pool of customers.
True, there those who skipped the iPhone 7 and upgraded to the 8, knowing that their 6’s would not be worth much soon, and this comprises the majority of the iPhone 8 upgrades.
However, it seems to me that Apple played an interesting game here, they released two new phone at once, knowing that some people can’t resist the upgrade. So the same people who upgrade usually once a year were more likely to upgrade to the 8 and then re-upgrade to the X.
Kam: Does this theory hold water?
Groysman: Only time will tell. However, Apple’s stock price, in the last month alone, has gone up about 9%.
Does this have anything to do with this “double dip?” What I can be sure of is that Apple will have larger than normal iPhone sales this year and it might be the largest one in recent memory.
Kam: What’s your target price?
Groysman: I am pegging Apple’s 12 month target at $250. While some might scoff at this number, one needs only to look at Apple’s past ability of creating new revenue streams, and I think they just found another one.
My Take: Eugene started his EMF Fund at Marketocracy in May of 2003. Over the past 14+ years, his fund averaged 15.88% which compares well to the S&P 500's 9.26% for the same period. Before taking anyone's advice, you should always check their track record. Here is Eugene’s.
For those who invested in Eugene’s fund, he originally bought Apple in February of 2005 at a split adjusted price of $12. His most recent purchase was on October 13, 2016 at $117. With the stock trading today north of $174, it looks to me like his latest buy is another well-timed Apple purchase.
Eugene’s fund is not a mutual fund. It is an investment option for clients of our separately managed account program. For information about investing with Eugene, click here.
To see my previously published articles about Apple, click here.
