APPLE STOCK AMERICA

PRESENTED BY:

AMRAHA AFTAB

MAHAM SADIQ

MUHAMMAD AMLISH ANWAR

MUHAMMAD BILAL JAWAID

 ANALYSIS OF THE ECONOMY AND INDUSTRY

• APPLE STOCK AMERICA

• US ECONOMY
• CEO:TIM COOK
• HEADQUARTERS: CALIFORNIA, UNITED STATES
• SELLS CONSUMERS ELECTRONICS, COMPUTERS SOFTWARE'S , ONLINE SERVICES
• IT’S A BIG FOUR TECH COMPANY ALONG WITH AMAZON,GOOGLE AND FACEBOOK
 ECONOMIC GROWTH

• GDP IS SEEN TO OBSERVE ECONOMIC GROWTH

• CALCULATE THE TOTAL EXPENDITURES ON ALL THE FINAL GOODS AND
SERVICES PRODUCED WITHIN AN ECONOMY
• 2018 THE GROSS DOMESTIC PRODUCT WAS 20494.10 BILLION
• 33.06% OF THE WHOLE WORLD’S ECONOMY
• PREVIOUSLY THE UNEMPLOYEEMENT RATE HAS DECLINED THAT SUPPORTS
GPDS GROWTH
 INFLATION
• INFLATION IS THE OVERALL GENERALIZED INCREASE IN THE PRICES OF THE
GOODS AND SERVICES IN AN ECONOMY OVER A PERIOD OF TIME.
• INFLATION IS INCREASING IN US WHICH MEANS THAT THE PRICES OF
COMMODITIES IS ALSO INCREASING
• 2014 TO 2015 RATE1.62% TO 0.12%(DUE TO DEFLATION IN OIL AND GAS PRICES)
• 2015 TO 2019 INFLATION RATE INCREASED
• EXPECTED RATE IN JAN 2020 IS 1.90
 CENTRAL BANK EXPECTED MONITORY POLICY

• IT COMPRISES THE FEDERAL RESERVE ACTIONS AND COMMUNICATION

• GOALS: MAXIMUM EMPLOYMENT, STABLE PRICES, AND MODERATE LONG-TERM
INTEREST RATES
• IT DIRECTLY EFFECTS SHORT TERM INTEREST RATES
• INDIRECTLY EFFECTS LONG TERM BORROWING
• ULTIMATE EFFECTS :HOUSEHOLD SPENDING, BUSINESS INVESTMENTS
,EMPLOYMENT ,INFLATION
• IN 2018 TIGHTENING MONITORY POLICY TO DRAG INFLATION RATE FROM 2.44%
TO BELOW 2% (INCREASING INTEREST RATES)
INTEREST RATE PAST HISTORY AND FORWARD

• INCREASING TREND TILL 2019 (DUE TO INCREASED INFLATION)

• IN 2019 FORECASTED INTEREST RATE WILL BE 1.75%(INFLATION DECREASES
1.90%)
 FORWARD VIEW ON STOCK MARKET

• INTEREST RATE 1.76% FIRMS MIGHT TAKE MORE DEBT INSTEAD OF ISSUING
SHARES (IPO)
• PRICES OF BOND WILL INCREASE
• BONDS WILL BECOME PREMIUM
• INVESTORS MIGHT SELL BONDS IN MARKET (TO ENJOY PREMIUM)
• CIRCULATION OF MONEY IN THE MARKET WILL INCREASE
 FINANCIAL MARKET AND REGULATORY
AUTHORITY
• SHARE/EQUITY MARKET (PARTIAL OWNERSHIP)
• SEC REGULATES
• ROLES OF SEC:
• MAINTAIN FAIR ORDERLY AND EFFICIENT MARKETS
• PROTECTS INVESTORS FROM ANY FRAUDS
• FACILITATE CAPITAL FORMATION
• INVESTORS CONFIDENCE IS DEVELOPED
 IPO METHODOLOGY AND ISSUER

• APPLE INC
• APPLE STOCK AMERICA
• DEVELOPS, AND SELLS CONSUMER ELECTRONICS, COMPUTER SOFTWARE, AND ONLINE
SERVICES
IPO
• DEC 12,1980
• RAISED 46 M SHARES AT A FACE PRICE OF $22
• STOCK SPLIT 4 TIMES SINCE IPO
 CHARACTERISTICS OF FINANCIAL ASSETS

• REPRESENTS FRACTIONAL OWNERSHIP IN THE COMPANY (DEPENDING ON

NUMBER OF SHARES)
• GIVES VOTING RIGHTS TO THE COMMON STOCK HOLDERS
• COMMON STOCK VALUE(DEPENDING ON COMPANIES PERFORMANCE)
• DIVIDENDS ARE PROVIDED TO COMMON STOCK HOLDERS DEPENDING ON LEVEL
OF PROFITS
 VALUATION METHODOLOGY

• CAPM TO DETERMINE THE FUTURE CASH FLOWS

• DSO: MEASURES THE EXPECTED FUTURE CASH FLOWS AND DISCOUNT THEM TO
TODAYS PRESENT VALUE
 RISK AND RETURN DYNAMICS

• IPHONE MARKET DECLINING (SALES DECREASING)

• TRADE WAR WITH CHINA
• PRICES OF IPHONE INCREASING
• REPURCHASING SHARES INSTEAD OF RESEARCH AND DEVELOPMENT
• MORE DEBT ON BOARD FINANCIAL RISK INCREASES FINANCIAL FLEXIBILITY
DECREASES
• THIS CAUSES BUSINESS RISK INCREASE
 RATING ASSIGNED

• 1-5 RATING SCALE

• EMPHASIS ON HOLDING AND BUYING STOCK
• REVENUE GROWTH RATE DECREASE(IPAD AND IPHONE SALES DECLINE)
• AVERAGE PRICE TARGET 252.61 (HIGH ESTIMATE:$325, LOW ESTIMATE :$150)
• CURRENT PRICE $266.37
• RECOMMENDATION:
• MODERATE BUYING OF APPLE STOCK
SIZE OF FINANCIAL PRODUCT IN THE
ECONOMY