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Apple Investors: Get Ready For New iPads

It is all but confirmed: Apple should launch new iPad Pro models in April. The Apple Maven discusses why the announcement could be important for the investment thesis.

The rumor mill is churning yet again. This time, Bloomberg reports that Apple will introduce a new lineup of high-end iPads in April.

The Apple Maven previewed the speculated launch a few weeks ago, although I still believe that other products could be unveiled in the spring as well. For example, the 16-inch MacBook could soon feature the new M1 chip, while the Cupertino company might have a replacement for the iMac Pro in the works.

Today, we discuss: why should investors care about Apple's new tablet announcement?

About the new iPad

If the rumors end up being confirmed, the newest Apple device to hit the shelves will be an 11-inch and a 12.9-inch iPad Pro. On the outside, the tablets should look like the current versions. But the processor and cameras will likely receive an upgrade.

The new iPad Air and eighth-generation iPad were launched as recently as September 2020. However, the iPad Pro has not been refreshed since around this time last year, suggesting that new models could, indeed, be on the way.

With most offices and schools around the globe likely to reopen later in the year, demand for higher-end tablets (in some cases, as laptop replacements) could increase. Apple should be ready to meet this demand.

Why should investors care?

2020 was a stay-at-home year. Despite all the challenges brought about by the pandemic, the silver lining for Apple was the increased popularity of laptops and tablets. As a result, iPad and Mac revenues shot through the roof.

See chart below. Despite being previously considered products in their mature life stages, laptops and tablets produced top-line growth in the double digits last year. Without these two segments, I estimate that Apple's total revenues would have been essentially flat in calendar 2020, rather than up nearly 6%.

Apple's trailing twelve-month revenue growth per segment 

Apple's trailing twelve-month revenue growth per segment 

The problem is that comps will be tough to beat in 2021, which could be a bearish setup for the stock. While I do not expect Apple's total sales to reverse course and decline, I believe that making the Mac and iPad segments shine in the year-over-year comparison will be tough.

Therefore, it is important that Apple prepares for the spring season first, and then the holiday quarter, with a solid product lineup. The new iPad Pro models will likely not make or break Apple's year, but they can help to make the P&L look better.

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)