Forget Beats! Apple Needs a New Game-Changing iPhone: StockTwits

NEW YORK (TheStreet) -- The Apple (AAPL) headlines this week focused on Tim Cook & Co.'s largest acquisition ever -- the $3 billion buy of Beats, a high-end headphone maker and music streaming service. But investors are less interested in how Beats' founders Dr. Dre and Jimmy Iovine can transform Apple's music service than in what Apple has hidden under the tarps.

In an interview at the Code conference this week, live blogged on Recode.net, Apple SVP Eddy Cue said Apple has a better product pipeline now than it has had in decades. (Jimmy Iovine then joked that Apple throws tarps over everything when he walks in.)

The pipeline comment has encouraged investors on StockTwits.com to buy greater stakes in Apple in anticipation of the launch of game-changing products. Sentiment on the stock is 90% bullish, according to StockTwits' analytics.

$AAPL Tim promised new products throughout 2014, now we have "best pipeline in 25 years" statement. I want to believe...

? Matthew (@Rolltidetrader) May. 29 at 06:59 PM

@Rolltidetrader I bet the house... Don't fail me now TC

? Michael Brownlee (@OptionsAva) May. 29 at 07:00 PM

Apple investors are most excited about the prospect of a new iPhone. Analysts and journalists have speculated that Apple will debut a 5.5 inch screen version of the iPhone with scratch-resistant sapphire glass, produced by GT Advanced Technologies (GTAT). A larger screen would help the iPhone compete with Samsung's Galaxy Mega, which boasts a 6.3 inch HD screen and a Google (GOOG) Android operating system.

Google Android phones have taken market share from the iPhone and now dominate the smartphone market. 80.2% of all phones sold in 2014 will be Android devices, according to a May 28 IDC report. Apple's market share is expected to drop from 14.8% in 2014 to 13.7% by 2018.

Talk of an iWatch has also generated considerable buzz.

Apple Product Roadmap: iPhone 6, Foldable iPhone, iWatch http://stks.co/j0fRG $AAPL

? ValueWalk (@valuewalk) May. 30 at 08:37 AM

Some investors said that the focus on hardware is misplaced. They pointed to a Goldman Sachs analyst note, published Friday morning, that claimed software would be Apple's long-term growth driver.

"@Street_Insider: Apple $AAPL Price Target Raised to $720 at Goldman; Next Big Thing Isn't Hardware, Says Analyst http://stks.co/i0fPX"

? Darcy Keith (@eyeonequities) May. 30 at 08:29 AM

See page 2 to hear Goldman Sachs' take on the stock.

"We expect upcoming hardware refreshes to act as powerful near-term drivers of earnings momentum and stock performance, but platform enhancements such as mobile payments, connected home solutions and personal health monitors should be far more important for driving switching costs and installed base expansion over time, and this is what will determine if Apple's cash flow can remain robust and substantially increase from current levels," wrote analyst Bill Shope in a May 30 note.

Shope boosted his price target to $720, according to the Analyst Ratings Network.

Even if Goldman is right, however, software enhancements are not the 2014 stock driver. And some investors worried that Apple could be timing a June 2 stock split, which will take place during Apple's Worldwide Developer Conference, to take attention away from a lack of exciting announcements at the event, which would otherwise spark a selloff.

$AAPL Anyone connect why AAPL spread split over WWDC? My guess, if WWDC is disappointment, then attention get diverted by split excitement?

? David (@DMactwit) May. 30 at 08:36 AM

After the split, Apple investors will receive six additional shares for every share they own, but the overall worth of their investment will remain the same. The split is intended to make Apple shares more accessible to retail investors who may be able to afford to buy a share at say, $91, but not at $635.80. The stock will begin trading at the post-split price on June 9, according to Apple's web site.

Most Apple investors, however, are confident that Tim Cook would deliver on his pipeline promise -- if not with announcements at WWDC, then with unveilings in the fall.

>>Read More: Microsoft Working On iOS, Android-Compatible Smartwatch: Report

>>Read More: Sozzi: The Old Mall May Be Dying but the Food Court Is Booming

>>Read More: Mark Zuckerberg Bets Big on the Bay Area

>>Read More: Tim Cook Is Doing Just Fine, One 'Incremental' Step at a Time

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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