Loup Ventures

About the Author Loup Ventures

At Loup Ventures, research is in our blood. The spirit of our team has always lived on the curiosity to discover new insights that yield investment opportunities. For years we did this on Wall Street, focused on public tech companies. Now we invest in private frontier tech companies, but public companies like Tesla, Nvidia, and others are also meaningful innovators in frontier tech. These public companies are shaping the emergence of AI, robotics, autonomous vehicles, and AR/VR just as much as early stage startups. As a result, we’ve always kept a watchful eye on public market participants to inform our private investment strategy. Gene Munster is a managing partner and co-founder at Loup Ventures. Prior to Loup Ventures, Gene was a managing director and senior research analyst at Piper Jaffray where he covered technology companies including Apple, Amazon, Google and Facebook. During his 21-year tenure, Gene received many acknowledgements including: Top Stock Picker from Forbes, Best on the Street from The Wall Street Journal, and was widely recognized for his work on Apple. Gene holds a bachelor’s degree in finance and entrepreneurship from University of St. Thomas.

What Apple’s Upcoming “There’s More in the Making” Event Mean for the Stock

By Gene Munster

Apple (AAPL) announced (October 18th) a special event in Brooklyn on October 30th. This is the fifth time in seven years that Apple has hosted two fall product events. Typically, the second event is less impactful than the September iPhone launch. That said, the collective upcoming product announcements will have an incremental impact on Apple’s overall business.

Key takeaways

  • We expect the event to over-index to refreshes of products used by creative professionals, based on the numerous artful event invite designs and the “making” reference.
  • This likely includes a new, lower-cost MacBook, new iPad Pros and Mac Mini, along with an outside chance of an iMac refresh.
  • Collectively, we estimate these products account for about 10% of Apple’s overall revenue (Mac and iPad segments in total will account for 17% of revenue in FY18).
  • Exiting the October 30th event, Apple will have refreshed products that account for about 50% of revenue in FY19. This compares to last year when the company refreshed products accounting for 37% of revenue. This is a near-term (1 year) positive for unit growth and, while our estimates remain unchanged, our confidence in those estimates has increased.

The Bigger Picture: Apple as a Service

Though the October event is incremental to Apple’s business, the specifics are less relevant to Apple’s long-term (> 1 year) valuation. Taking a step back, the historical view is that shares of AAPL move higher in anticipation of new products and trade off after they are announced. Investors are increasingly less focused on the latest features around product announcements and more focused on the ability of these products to retain and slightly grow its current user base with increasing revenue per user. We call this emerging view Apple as a Service: stable iPhone businessServices growth, a significant capital return, and new markets.

Disclaimer: We actively write about the themes in which we invest or may invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we may write about companies that are in our portfolio. As managers of the portfolio, we may earn carried interest, management fees or other compensation from such portfolio. 

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