Apple (NASDAQ:AAPL) headed into its fiscal 2021 very first quarter with expectations that are higher from investors. The highlight of Apple’s quarter was the launch of the iPhone twelve, the tech titan’s very first 5G smartphone. Investors anticipated excellent sales as wireless carriers force their 5G networks and build excitement around the brand new iPhones. All signs suggest Apple’s delivered on those expectations.
Here are three of the most noteworthy developments bolstering Apple’s stock heading into its earnings report later this month.
1. You still must wait around forever to get an iPhone twelve Pro
It has been above two weeks since Apple introduced the iPhone 12 Pro, and customers purchasing nowadays still have to wait a maximum of 3 months for delivery. That may as well be for years in the age of next-day delivery. By comparison, it took only 6 days for iPhone eleven demand to achieve equilibrium with supply last year, based on Credit Suisse analyst Matthew Cabral. The Apple iPhone twelve Pro observed from an angle.
The regular iPhone twelve and also the iPhone 12 Mini are much more readily available both in store and for instant delivery. That hints Apple better see an improved average selling price (ASP) for the iPhone when it announces its first quarter results.
Apple is reportedly ramping up production for the iPhone twelve in the first half of 2021. Combined with other factors suggesting very strong iPhone sales for the quarter, the higher ASP should lead to iPhone revenue significantly outperforming. And considering iPhone accounts for fifty % of revenue, and usually closer to sixty % in the earliest quarter, which should have a significant influence on the revenue of its versus expectations.
2. Suppliers are publishing big revenue numbers
Apple’s biggest iPhone assembler, Foxconn, announced record revenue for the month of December. The Taiwanese company, which trades as Hon Hai Precision, reported sales of 713.8 billion New Taiwan dollars (aproximatelly $25.5 billion) for December, and quarterly revenue of NT$two trillion. The beat expectations of NT$1.8 trillion, according to Bloomberg.
Foxconn’s outperformance is also in line with the greater-than-expected demand for the iPhone twelve Pro. The business is the exclusive supplier of the high end devices.
Meanwhile, Dialog Semiconductor raised its fourth-quarter revenue perspective from a range of $380 million to $430 million to between $436 million and $441 million, Barron’s reports. The chipmaker cited increased demand for 5G chips as the main reason. Considering Apple accounts for the majority of the revenue of its, it’s a pretty good bet those chips are actually going in iPhone 12s.
And in late December, Wedbush analyst Daniel Ives said his Asia source chain checks “have today exceeded even our’ bull case scenario'” in a note to investors.
3. New records in the App Store
Apple reported record gross sales for the App Store of its in its annual brand new year update. In the week in between Christmas Eve and New Year’s Eve, iOS users spent $1.8 billion in the App Store. That is up twenty seven % from year which is last, and an acceleration from the sixteen % growth in sales in the exact same period in 2019. The company also recorded $540 million in sales on New Year’s Day, up about 40 % from year that is last. Those numbers suggest a great deal of new iPhones underneath the tree this year.
Additionally, it bodes very well for Apple’s all-important services segment — its fastest-growing and highest-margin business. The App Store is actually Apple’s most profitable service, generating yucky earnings well above the membership services of its like Apple Music or maybe Apple TV. So outperformance on that front must result in better-than-expected earnings.
Morgan Stanley analyst Katy Huberty notes, “If we maintain the rest of our December quarter Apple Services forecast unchanged, the most recent App Store data would imply December quarter Services revenue of $14.84 [billion]… forty [basis points] ahead of consensus at $14.78 [billion].” It’s most likely, nonetheless, that more potent App Store sales are a great indication of stronger sales of Apple’s other services.
It looks like the iPhone supercycle may be a reality this year based on the first results we have seen as well as other hints at need which is strong. And that’ll bolster Apple’s entire company — and the FAANG stock — if this reports its complete results on Jan. 27.