Apple App vs. Apple Stock Investment Analysis

When someone has money to invest the first thing people recommend is stocks and real estate. People seem quick to put down any alternative investment ideas or business opportunties.

In this post I want to compare the investment I made in a Mac application in August 2011 to a hypothetical purchase of Apple stock I could have made with that money instead.

The App Development

In 2011 I switched from a PC to a Mac computer. I was in need of a video to GIF converter, but I was unable to find a good one at a quality price. I pondered launching my own, but hesitated for a few months before deciding to take the plunge.

I hired a Mac app developer on Elance.com, now known as Upwork.com. It cost $3,700 to have the application developed.

It launched in August 2011, I was nervous it wouldn’t earn any money but, it made over $1000 the first month it was for sale. As of October 13, 2019, the application has made me $13,500.

Paclake

The app has never been updated and I rarely get questions asking for support. It has been a hassle free income ever since it launched in 2011. Below you can see the app earnings by year.

App yearly

Apple Stock

I pulled up Apple’s historical stock price from August 15th, 2011. On that day the stock closed at $54.77, that price is adjusted for stock splits.

With $3,700 to spend in August 2011, I could have purchased 68 shares at that price. As I write this post, the stock market is currently closed. Apple’s stock is sitting at a price of $236.41 a share.

Multiply that number times 68 and those shares would be worth $16,075.88 today. Obviously investing in Apple stock would have been a better investment as it is $2,575.88 higher than the money I made selling my Mac application.

Dividends

It gets worse. Apple started paying a dividend to investors on August 16th, 2012. I found articles stating the first dividend was $2.65, however this is not adjusted for splits.

Since Apple had a 7-for-1 stock split on June 9, 2014, I would adjust the dividend per share to .38 cents a share for the first three quarters. It went up to .44 cents a share for the next four quarters and it was .47 cents for one quarter before the 7-for-1 stock split.

From the starting dividend price of .38 cents to the current dividend price of .77 cents, I could have made another $1,096.16 from dividends on top of the $16,075.88 I mentioned earlier for a total of $17,172.04. By choosing the Apple app over the Apple stock I cost myself $3,671.96.

Dividends

Below you can see what I would have made each year from dividends.

Yearly

The Smart Move

Another thing I could have done is took the earnings from the app and purchased Apple stock with it. The app made $2,740 the first 5 months it was for sale. In 2012 it made another $3,820.

I could have had the best of both worlds and made $30K over the past 8 years by using my first 17 months of earnings to purchase shares of Apple stock.

Obviously I am oversimplifying things as the stock shot up to the $90 range in the fall of 2012. I wouldn’t have been able to purchase all my shares for $54.77 a share, but I still could have purchased at minimum 3 shares a month for 17 months.

Cash Flow Factor

Numbers show the Apple stock as the clear winner, but there is another factor. What I did with the money has to be evaluated. The Mac app was providing me with a decent amount of cash I could use every month. The stock wouldn’t have been providing much cash flow.

If I used the Mac app income to invent something or launch a business that made 6 or 7 figures it would be the overall winner. Unfortunately, I likely spent it on living expenses or business ventures that did not work out so I can’t declare it the winner.

Alternative Investments vs. Stocks

I have owned stocks and I have spent money on my own business ideas. The thing with alternative investments is your money is not tied up like it is with stocks, so you can actually use your profits pursue other opportunities.

Even if a stock pays dividends it won’t be significant unless you have thousands of shares. That $115.60 to $191.76 a year I could have made from Apple dividends breaks down to $9.63 to $15.98 a month. Not much you can do with that.

The section about using my app income to purchase stock is probably the perfect route to pursue. Launch a product or service and commit to investing a certain amount or percentage of those earnings in a stock you are interested in.

That way you can have the income from an alternative investment and the capital gains from a traditional investment all in one.

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About the Author: Andre

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