Daniel Howley


Apple’s (AAPL) stock began trading this morning at its new split-adjusted price of $124.81, and immediately began trading higher following the opening bell.

The stock ended the day at $129.04, an increase of 3.39%.

Apple announced the 4 for 1 stock split as part of its Q3 2020 earnings report, saying that the move would “make the stock more accessible to a broader base of investors.” Investors who held the stock at the close of markets on Aug. 24 received an additional 3 shares of Apple at the new price.

Apple’s stock has been on a tear this year, with the company’s market cap hitting $2 trillion on Aug. 19. Apple’s historic run has been all the more impressive given the fact that it only passed the $1 trillion mark two years earlier in 2018, and reached $1.5 trillion just two months ago.

Apple’s new pricing reduces its overall impact on the price-weighted Dow, moving it down from the most influential spot when it was trading at about $500 to the middle of the pack. That makes UnitedHealth Group the new most influential stock on the Dow followed by Home Depot, and pushing Apple below the likes of Microsoft and McDonald’s.

But as Yahoo Finance’s Brian Cheung explained in his recent edition of “Yahoo U,” that doesn’t mean anything for Apple’s own market value. That’s because while the price of a single share is lower, the split created more individual shares.

Calculate the company’s market cap based on the new price and number of shares, and you’d get the same amount you’d have gotten if the stock didn’t split and shares stayed at their higher price.

Analysts agree Apple’s future is bright

Wedbush analyst Dan Ives points to even greater potential growth in Apple’s future, specifically in the next 12 to 18 months. That growth, Ives said in a recent research note, will come from as many as 350 million of Apple’s 950 million global iPhone users who are ready to upgrade to Apple’s upcoming iPhone 12.

That device, which is widely expected to be Apple’s first 5G-capable smartphone, could play especially well in China, Ives said, with the region potentially making up as much as 20% of iPhone 12 sales.

All of this depends on consumer sentiment during Apple’s launch period. And with unemployment numbers still high, and stimulus talks in Congress stalled, it could be difficult for many consumers to justify spending hundreds of dollars on a new smartphone at this time.

Still, Apple has spent much of its time in the past few years ensuring that it isn’t as dependent on iPhone sales as it once was. To that end, the firm has dramatically increased revenue from its Services division, adding subscription options including Apple Music, Apple TV+, and Apple Arcade.

In its most recent quarter, that business saw revenue of $13.12 billion compared to iPhone revenue of $26.4 billion. Revenue for Apple’s other businesses, which include iPad, Mac, and Accessories range from $7 billion to $6.4 billion.

With the new stock split, Apple could see a raft of new investors, hoping to get in just before it launches its next line of products in September.

Author: Daniel Howley

Source: Finance. Yahoo: Apple shares up more than 3% on day of stock spilt

Apple (AAPL) has officially become the first U.S. company worth a staggering $2 trillion. The iPhone maker hit the mark after its stock price touched $467.77 on Wednesday, pushing its market cap higher than any other U.S. company in history.

Apple’s rise to the $2 trillion milestone comes after hitting $1.5 trillion in June, and two years after topping $1 trillion for the first time. Since then both Amazon (AMZN) and Microsoft (MSFT), two other high-flying tech stocks, have crossed the $1 trillion mark and are now valued at more than $1.5 trillion.

CEO Tim Cook and company have been riding a hot hand for years on the strength of Apple’s iPhone sales. The handset, which launched in 2007 under then-CEO Steve Jobs, was transformational for the company, putting it at the forefront of the still nascent smartphone industry and never looked back.

More recently, Apple, seeing a slow decline in smartphone sales growth along with the rest of the industry, has been pushing other sectors of its business including its Services and Wearables arms.

The consumer tech giant doubled down on offerings in both areas, launching Apple Music and Apple TV+, as well as introducing the Apple Watch and the now iconic AirPods. Apple is now among the top wearables makers in the world on the strength of those two devices.

Apple’s future growth

But analysts still see more room for growth.

“Look, I think this is a monumental achievement for Apple, especially as many of the doubters thought the growth story at Cupertino was over years ago,” Wedbush analyst Dan Ives told Yahoo Finance.

“I think it all comes down to the install base. The company has an unmatched install base, which now further monetization of that through services has been the key to success.”

Apple is also set to launch its new flagship smartphone, the iPhone 12, later this fall. And while the device will be delayed beyond its normal launch window of late September due to the coronavirus pandemic, it, according to Wedbush analyst Dan Ives, is expected to spark what’s known as a sales “supercycle,” or a massive uptick in the number of people buying new iPhones.

The iPhone 12 is widely expected to be the company’s first device to include 5G cellular capabilities, which offer superior download and upload speeds compared to existing 4G LTE data connections. The switch is likely to entice iPhone owners who have been holding on to their devices for several years thanks to the promise of improved video streaming and downloading, and the wide breadth of potential the faster connection will offer.

But Apple is also making structural changes to its products to ensure that it is able to grab even more margin from its products. The firm is currently in the process of building out its own processors for its Mac line of products, leaving behind the Intel processors it has relied on for years.

The move will not only unlock additional margin for the business, which won’t have to pay fees to Intel any longer, but could push Apple’s laptops and desktops even further ahead in terms of raw performance power.

Apple, however, is also in the midst of several queries into its business practices. The firm is facing investigations by a coalition of state attorneys general, the Department of Justice, and the House Judiciary Committee’s Subcommittee on Antitrust, Commercial, and Administrative Law into whether current App Store policies create an illegal monopoly for Apple.

More recently it’s gotten into a brawl with “Fortnite” maker Epic Games over Apple’s 30% App Store commissions.

The outcome of those investigations is unclear, but experts believe there’s little chance they will end with a breakup of the iPhone maker.

For now, Apple looks like it’s set to continue to grow. For how long is anyone’s guess.

Author: Daniel Howley

Source: Finance. Yahoo: Apple now worth $2 trillion

Apple’s (AAPL) market value hit a new all-time high on Wednesday, eclipsing $1.5 trillion, and making it the first U.S. company to ever hit that mark. And while the market is certain to have ups and downs, like the subsequent rout on Thursday, industry analysts still believe the iPhone maker has more than enough room to continue growing.

Wedbush analyst Dan Ives has pointed to Apple’s market capitalization hitting $2 trillion, and BofA Securities’ Wamsi Mohan upgraded the stock’s price target from $340 to $390 a day after Apple hit its new peak.

So what’s driving Apple’s market performance? Well, its hundreds of millions of active users, wildly popular accessories, and its plethora of services are easily the biggest draws. However, the company could still face trouble as a result of trade disputes. And its Apple TV+ service still hasn’t taken off the way it was expected to.

The case for Apple’s continued growth

Just a few months ago, Apple was facing major obstacles in the form of supply-chain interruptions and store closures caused by the coronavirus pandemic. The company eventually pulled its Q2 guidance and hasn’t issued guidance for Q3.

But Apple still managed growth in Q2 on the strength of its services and accessories business, despite a 7.2% year-over-year drop in iPhone revenue.

Apple, however, has a potentially massive revenue generator in its upcoming iPhone, which is expected to be called the iPhone 12. The phone, which could be delayed until October due to the coronavirus’ impact on the company’s supply chain, is all but certain to be Apple’s first 5G-capable device.

According to Ives, the phone should be a sales monster for Apple, launching a so-called “super cycle” with consumers rushing to get Apple’s first device sporting next-generation connectivity.

Apple team members demo the new cameras on iPhone 11 Pro for guests during an event to announce new products Tuesday, Sept. 10, 2019, in Cupertino, Calif. (AP Photo/Tony Avelar)

“With 350 million of roughly 950 million iPhones worldwide currently in a window of an upgrade opportunity, Cupertino is roaring its engines ready to capitalize on this dynamic coupled by an AirPods franchise slated to sell 85 million this year (vs. 65 million last year),” Ives wrote in a May research note.

Mohan, meanwhile, points to Apple’s wearables lineup, in addition to the 5G iPhone, as a key reason for the stock’s continued growth.

Moving forward, Mohan sees the company’s transition to a continuous revenue model as a reason for its potential.

Apple’s services business, which consists of the App Store, Apple Music, AppleCar, and iCloud, is a major engine for the company, earning $13.3 billion in Q2. But Apple TV+, the firm’s answer to Netflix (NFLX), isn’t quite as popular as competing offerings.

Potential blind spots

According to Bloomberg, as of May, the TV+ service, which launched in November 2019, had 10 million subscribers, with just 5 million active on the platform. Compare that to Disney+, which also launched in November and already had 50 million users as of April.

It’s worth noting that Disney+ is more expensive than Apple TV+, $7.99 per month versus $4.99 per month. Disney, however, has access to its incredible backlog of movies and TV shows, as well as 20th Century Fox’s shows and movies.

It’s clear that Apple needs to make moves to accelerate Apple TV+ growth, and according to Ives, that could involve the company scooping up a Hollywood studio. Bloomberg also reports that the tech giant is looking into deals for older shows and movies, something Apple was hesitant to do out of a desire to rely solely on its own original content.

Then there are potential trade disputes that Apple has to worry about. With tensions between the U.S. and China continuing to ratchet up as a result of China’s clampdown on Hong Kong and the ongoing back and forth between the two countries on the origins of the coronavirus, there are fears that a new trade dispute could break out.

The U.S.’s decision to restrict American companies from working with China’s Huawei could also come back to haunt Apple if Chinese consumers decide to boycott Apple’s goods in retaliation. What’s more, if China decided to hit directly at Apple by placing it on some kind of trade blacklist, it would be difficult for the company to quickly move its manufacturing operations to a new location.

For now, however, Apple is seemingly riding out both the virus and transnational strife with relative ease.

Author: Daniel Howley

Source: Finance. Yahoo: Apple could still go higher after hitting $1.5 trillion valuation: Analyst

A rivalry is heating up between Facebook and Amazon that could lead to a power struggle between the social networking giant and the ecommerce titan over everything from ad sales to where consumers shop online.

The latest salvo came on Tuesday when Facebook (FB) announced its newest venture into the ecommerce realm with the launch of its Facebook Shops storefront. Available now, Facebook Shops lets retailers set up their own ecommerce portals that are accessible from their existing Facebook profiles.

And just as Facebook is leaning more into ecommerce, Amazon (AMZN) is digging deeper into the online advertising market. In the company’s most recent quarter, Amazon’s “Other” business segment, which is made up largely of its advertising division, saw 44% year-over-year growth, topping out at $3.9 billion.

That’s still a far cry from Facebook’s Q1 2020 advertising revenue of $17.4 billion, but Amazon’s year-over-year advertising growth has been around the 40% range for the past five quarters, and according to a report from eMarketer, the company currently sits in third place behind Google and Facebook in terms of advertising market share.

It’s clear that Amazon is going to continue to push into advertising as hard as possible, which is sure to irk the higher ups at Facebook. But two can play that game, which is where Facebook Shops comes in.

To get the program running, Facebook is teaming with ecommerce heavyweights like Shopify (SHOP), BigCommerce, and others to help businesses set up their online portals. Shops won’t just be on Facebook, though. The social media firm says that it will bring a similar shopping experience to Instagram, as well as WhatsApp and Messenger. That would open Shops up to every one of Facebook’s 2.6 billion monthly active users.

“We see a material opportunity to improve user monetization across FB and IG in the eCommerce vertical (more relevant products, less purchasing friction = higher conversion rates),” BofA Securities analyst Justin Post wrote in a research note following’s Facebook’s announcement.

“Given the opportunity, we think any signs of traction for Instagram / Facebook shopping could be a potential catalyst for FB in ’20/’21, while Amazon, eBay and Google could see some (small) sentiment risk,” he added.

Amazon founder and CEO Jeff Bezos. (Photo by MANDEL NGAN / AFP) (Photo by MANDEL NGAN/AFP via Getty Images)

Facebook will also add chat to its arsenal in its drive to becoming an even bigger ecommerce contender. The company says it will allow merchants to communicate directly with customers via Messenger, WhatsApp, and Instagram Direct to do everything from offering support to providing order tracking information.

And then there’s the live component of Facebook Shops, which will allow for a QVC-esque live video shopping experience via Instagram, which influencers are sure to glom on to the minute it’s available.

As Morgan Stanley analyst Brian Nowak points out, Instagram has the opportunity to bring in $4 billion in sales annually.

“We believe consumer ecommerce behavior is moving in FB’s direction and over time these new offerings could lead to even broader social shopping (and FB monetization) from small and medium sized businesses … to larger retailers/brands,” he wrote in a research note.

Facebook will increasingly move in on Amazon’s share of the small and medium business marketplace, while Amazon will continue to strike into the advertising market. And while both companies will continue to maintain commanding leads in their respective sectors, expect them to view each other as greater rivals in their spaces, and make moves to push back against their new competitors in the years ahead.

Author: Daniel Howley

Source: Finance. Yahoo: Facebook and Amazon’s new rivalry is heating up

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