Apple's Fluctuating Share Price Is Not A Concern

Ashley is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

There’s a lot of opinions with regards to Apple’s (NASDAQ: AAPL) stock, is it over priced? Is it fluctuating too much?  Is it a safe bet like it was once upon a time?  In short, the biggest concern investors have is - has Apple overplayed its hand?

Ok, enough of questions. Let’s try and dig into Apple's performance and address all the concerns mentioned above. $450 in January 2012, $700 in September 2012 and back to $450 towards the end of February 2013, these are the fluctuations in the share price of Apple that have shocked investors.  Well, all such fluctuations work out for a long term patient investor, for the rest of us it’s just noise.  Despite all this, I still strongly feel that Apple is still a buy and here’s why.

Apple and its monster network brings in the moolah

Apple announced in their recent press release that there are over 300 million users that have the latest iOS 6 installed on their Apple devices. iOS 6 can only be installed on iPad 2 and above devices as well as iPhone 3GS and above devices. Considering the iOS 6 and the 1 million+ apps available for Apple devices, they seem to have enough and more users to receive revenue from.

iPodNN reported impressive iCloud and iTunes figures. In the past 12 months that include the birth of IOS6, iCloud users have increased from 85 million to 250 million. iCloud enables synchronization between a host of Apple devices, which in turn makes you want to shift your entire gadget base to iDevices. iTunes has helped Apple fetch a revenue of $2.1 Billion in its fourth quarter alone, thanks to its 500 million iTunes users .

Apple has held its competitors at bay

Let’s get into numbers now, Samsung (NASDAQOTH: SSNLF) did triumph over Apple in terms of number of smartphones sold in the holiday quarter, but this is where margins come in. Despite outselling Apple, Samsung fell short by $5 billion in the earnings battle. Samsung was not the only victim in regards to earnings falling short, Google (NASDAQ: GOOG) and Amazon both fell short by $2.9 Billion and $97 million respectively.  Apple was able to reach these figures because of its 'Alpha Male' position in the tablet market. Apple sold 22.9 million iPads in the last quarter alone. But let's not forget that Google's market performance is improving, and more recently, is on an amazing run, with their shares hovering around at a value of $840/share right now.

In the Apple vs. Samsung war, it’s no more a one sided affair as far as tablets as concerned. Sales numbers show that Samsung represent 4% of Apple sales when it comes to tablets, falling behind Amazon's 6% market share. Google, at the same time, barely crossed the one million monthly mark in December with the launch of their Nexus series of tablets.

Apple sales figures of 500 million+ iOS devices showcase their domination in the mobile market. As far as the fourth quarter is concerned Apple managed to sell a whopping 75 million of their iOS devices.

A very straight forward and simple conclusion

Apple reported a growth figure of 128% in their iPhone sales and 111% in their iPad sales in the last quarter of the previous year. They found it pretty hard to beat these three digit figures in the last quarter, which resulted in a drastic dip in their share value. But Apple has a free cash flow ratio of 28% compared to Google’s 26.5, so this is an impressive figure keeping in mind that Apple sells hardware primarily.

All in all, the recent fluctuation happened because the market over reacted to Apple’s last quarter performance, but the fact remains the same, Apple still continues to post impressive sales figures and even in the face of a growing competition, Apple is still holding strong.

ajs360 has no position in any stocks mentioned. The Motley Fool recommends, Apple, and Google. The Motley Fool owns shares of, Apple, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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