3 Things About Apple That Smart Investors Know

Shares of Apple (AAPL -0.03%) have a reputation for reliable growth, rising 279% in the last five years and 897% in the last decade. The company's stability stems from a powerful brand that has immense loyalty among consumers willing to pay a premium for its products and their interconnected ecosystem. 

Apple often faces scrutiny as the company with the largest market cap in the world at about $2.5 trillion. It regularly fields criticism for controversial moves from those who don't share the company's long-term vision. Most recently, it made headlines for its ventures into finance and mixed reality. 

While the stock's past performance makes it look like a sure thing, it's wise to be fully informed about a company before adding it to your portfolio. Here are three things about Apple that smart investors know. 

1. It's pushing further into finance

On March 29, Apple increased its push into finance by launching a buy now, pay later (BNPL) program in the U.S., challenging similar services from Klarna and Affirm. The new service is available to select U.S. consumers and has been built directly into the company's Wallet app.

Apple Pay Later will offer zero-interest loans ranging from $50 to $1,000, allowing consumers to pay for various goods and services in four payments over six weeks. The loans will go through an Apple-owned subsidiary called Apple Financing.

The new venture has the company partnering with Goldman Sachs, as Apple did when launching its credit card in 2019. The banking organization will grant Apple access to Mastercard's network, since the iPhone maker does not hold a license to issue payment credentials.

Apple Pay Later has been directly integrated into the iPhone, which will likely boost the service's mass adoption thanks to the company's leading 24.1% market share in smartphones.

A BNPL program could prove incredibly lucrative in the long run, with future price increases in its iPhones and other products potentially being an easier pill to swallow if consumers can pay over time. And the financial service could expand the company's smartphone market share by attracting users who otherwise wouldn't be interested in its products. 

2. There is internal conflict over a new product

A New York Times article on March 26 described dissent at Apple about the launch of its first augmented/virtual reality (AR/VR) headset later this year. Executives are reported to be concerned about the device's profitability in an untested market, its high price tag, and its utility prospects. 

The mixed-reality headset is expected to have AR and VR features displayed in an iOS-like interface, and to cost around $3,000. The device will reportedly be launched in June, with CEO Tim Cook telling a group of students in 2022, "You'll wonder how you lived your life without augmented reality, just like today you wonder: How did people like me grow up without the internet?"

Mixed reality is a steadily growing market. The AR and VR industry is projected to expand at a compound annual rate of 13.72% through 2027, hitting a value of $52.05 billion, according to Statista.

Apple has beaten the odds before when entering new markets. It had many critics when it released the first iPhone and iPad. Past successes in numerous other unproven markets suggest the company could be the future leader of a booming mixed-reality industry. 

3. It's the most valuable brand in the world

According to Omnicom Group's global brand consultancy Interbrand, Apple is the most valuable brand in the world at $482.2 billion. Just behind it is Microsoft at $278.3 billion and Amazon at $274.8 billion. 

Apple's climb to the top of tech grants it more power than most when releasing new products. Its potent brand allowed it to achieve dominating market shares in smartphones, tablets, smartwatches, and headphones. The company's share in tablets is 49.2% after triggering mass adoption of the devices with the first iPad in 2010.

The company has similarly taken over the headphone market with its line of AirPods, hitting a 34.4% share in 2021. When including its subsidiary Beats, that share jumps to 49.7%.

Apple is a diversified company with a growing line of products and services. It might stumble when first entering the AR/VR market, but thecompany seems to have a better shot than most at succeeding, thanks to its powerful brand. Meanwhile, its expansion into other markets, such as finance, will likely prove fruitful, making Apple's stock an excellent buy right now.