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.

Hot Takes from Apple’s (AAPL) September Event

By Gene Munster

  • Apple (AAPL) continues to push the boundary of consumer tech by refining and improving their products with today’s updates to the iPhone and Apple Watch. These improvements drive customer loyalty that creates revenue predictability and should result in higher ASPs, supporting annual cash from operations of $85B+ per year that can be invested in the business and returned to investors.
  • Once again, Apple has shown their mastery of pricing tiers. Factoring in nine new phones with price points above the FY18 ASP ($745) makes it highly likely that ASPs will trend up.
  • The iPhone lineup now ranges from $449 to $1,449, with an unweighted average of $765. This is up 20% from last year when the unweighted average was $636, with the lineup ranging from $349 to $1,099.
  • Apple is also building an insurmountable lead in the wearables space for two reasons. First, WatchKit makes it easier for developers to build on Watch. Second, Apple is aggressively advancing hardware, including display, processor, and sensors (most recently adding ECG and fall monitoring).
  • We estimate that wearables represent ~5% of revenue today, but is growing quickly, up 60% in Jun-18 compared to 50% growth in Mar-18.
  • While we were disappointed by the AR use cases showcased at today’s event, we are still optimistic about the AR opportunity and feel Apple has the best AR platform available today.

The Mix Reveals the ASP Story

Our biggest near-term takeaway from the event was that ASPs are moving higher. We are raising our estimates, expecting a 7% ASP increase next year from $745 to $791. Given the mix, it’s hard to see ASPs next year below $800 (vs. $745 this year). The table below compares our product mix assumptions.

To illustrate our conservatism, our model anticipates 38% of new unit sales come from the Xr line, the lowest-priced of the new phones. This compares to our assumptions of 12% of units from Xs Max and 9% from Xs. From a high level, our modeling methodology is consistent with past years in that we’re expecting the newest SKUs (Xs Max, Xs, and Xr) to account for 59% of new iPhone sales, compared to last year when we estimated the newest SKUs (8 and X) accounted for 54% of new sales.


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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