Apple The stock looks like a $ 142 buy

Apple The stock looks like a $ 142 buy

Apple seems ready for a robust upgrade cycle with the launch of the new iPhone 13 lineup, which features meaningful camera and battery upgrades. According to Bloomberg, the company is also aiming to avoid the supply shortage faced with the iPhone 12, and suppliers appear to be making 90 million new iPhones this year. This is 20% higher than the initial production of our flagship product last year. Career promotions for new devices are also attractive as wireless carriers are trying to sign on to customers of recently built 5G networks. Momentum in the iPhone business has always been a big catalyst for Apple stocks, which could be verified when Apple announces earnings for the first quarter of 2010.

Apple’s stock price (NASDAQ: AAPL) fell about 9% from last month and remains down about 1% last week. The decline is partly driven by broader market sales amid rising bond yields, but district judges have ruled that Apple must allow Apple to provide links to app developers. As a result, Apple has also seen a legal setback related to the Epic Games v Apple litigation, bypassing Apple’s fees (usually 15% to 30%) for alternative payment methods for applications sold through the App Store. .. However, we believe Apple’s share price has room to go from its current level. The value of the stock is $ 157, which is about 27 times the expected return for 2010 and 10% above the current market price of about $ 142 per share. There are several factors that drive a reasonably bullish stance.

Highlights

  • So is Apple’s share price ready to rise in the short term after a 9% drop from last month? The TrefisMachine learning engine, which leverages 10-year stock data, estimates that Apple’s stock could rise 56% next month.look Opportunity for the rise of Apple For more information.

  • Apple’s services business is also ready to withstand the growing install base of iDevices and new digital services such as Apple TV + and Apple Fitness +, despite the recent App Store payment recession. .. The district judge in the Epic case rejected Epic Games’ claim that the App Store was monopolized, so Apple also avoided a major potential setback in the App Store business. This could eliminate overhangs in Apple’s stock and services business.

A district judge ruled in a proceeding against Apple (NASDAQ: AAPL) vs. Epic Games last week, requiring app developers to be able to provide links to alternative payment methods for apps sold through the App Store. I pointed out that there is. To date, Apple’s own payment system has been the only option for developers, and Apple typically charges between 15% and 30%. However, the judge dismissed Epic’s claim that the App Store was monopoly. This is actually a bigger legal risk for Apple, and the news should be a big relief for investors. Apple’s share price fell about -3% on Friday, but it’s not a big blow given that it has risen about 15% and almost 30% in the last 12 months.

How Does the App Store Payment Decision Affect Apple Stocks?

Payment decisions are currently hitting Apple’s highly profitable App Store business. We estimate that this will account for about $ 18 billion in Apple’s 20-year revenue. It’s probably safe to assume that Apple will lose billions of dollars in annual App Store-related revenue, as developers are trying to direct their customers to their own low-cost payment options. However, we believe this is something Apple can manage in the long run. There are several reasons for this. First, many developers and customers may continue to prefer Apple’s own in-house payment option due to its convenience and seamless integration with the iPhone experience. In addition, Apple’s services business is growing rapidly, with the introduction of new subscription services, which led to a 29% increase in sales in the first nine months of 2009. This can help hide the long-term effects of hits. App Store revenue.

What’s at stake for Apple as the epic case goes to trial?

Apple’s (NASDAQ: AAPL) highly profitable services business faces the biggest legal challenge to date as Epic Games’ proceedings against Apple and its App Store were filed on Monday. Epic claims that Apple’s App Store is an anti-competitive market, trapping customers and reducing the revenue of mobile app developers. Game developers sued Apple in August 2020 after the popular Fortnite game was removed from the App Store shortly after Epic forced players to bypass Apple’s in-app purchase system and circumvented a 30% sales commission. I did. So what’s really at stake for Apple and its services business? Apple is increasingly looking to sell digital services to increase profitability and stabilize revenue, which has become somewhat volatile in recent years. In the most recent quarter (second quarter of 2009), services accounted for about 19% of Apple’s total revenue and about 31% of gross profit. Apple has also launched a number of new services in recent years, including fitness tutorials, paid podcasts, and streaming video. However, fees from the App Store and third-party subscriptions, which are the main targets of the Epic proceedings, still consist largely of fees (usually 15% to 30% of the purchase price) and therefore still dominate the service revenue. I think it occupies. ). Together, the two service revenue streams are estimated to account for approximately $ 23 billion of Apple’s approximately $ 54 billion in service revenue last year. I don’t speculate on the possible consequences of this incident, but if Apple is forced to cut fees significantly or allows app developers to bypass the store, it will have a meaningful impact on Apple’s revenue. Is clearly seen.

A spectacular proceeding hits Apple’s stock Last week, Epic Games announced that Apple had an anti-trust breach after the popular Fortnite game was removed from the App Store shortly after the popular Fortnite game bypassed Apple’s in-app purchase system and evaded a 30% sales commission. NASDAQ: AAPL) was sued. Apple has had quarrels with developers in the past, but the Epic proceedings are noteworthy for several reasons. First, the Epic proceedings occur when tech giants, including Apple, face increased regulatory scrutiny of market power. Second, Apple is more dependent on the services business than ever, and hardware growth is slowing (services profits are five times higher than hardware profits in the first three-quarters of 2008. Epic’s lawsuit covers Apple’s fees. Quotes are Apple’s single most profitable source of revenue.

Apple has earned approximately $ 360 million in commissions from Fortnite for each Sensor Tower over the past two years. This has resulted in more than $ 260 billion in revenue last year, with Apple’s buckets declining relatively. [1] However, if Epic makes a favorable decision and Apple is forced to reduce fees or change the terms of the App Store, this is very likely to set a precedent, with other developers setting similar terms. Will cause a request.