Apple (NASDAQ:AAPL) headed into its fiscal 2021 first quarter with expectations that are high from investors. The highlight of Apple’s quarter was the launch of the iPhone 12, the tech titan’s first 5G smartphone. Investors anticipated strong sales as wireless carriers push their 5G networks and build excitement around the new iPhones. All signs indicate 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 need to wait around forever to get an iPhone twelve Pro
It’s been approximately two months since Apple released the iPhone 12 Pro, and customers purchasing today still have to hold back a maximum of 3 months for delivery. Which may as well be for decades in the era of next day delivery. By comparison, it took just six months for iPhone 11 interest to attain equilibrium with supply last year, based on Credit Suisse analyst Matthew Cabral. The Apple iPhone twelve Pro observed from an angle.
The standard iPhone 12 and also the iPhone twelve Mini are much more being sold both in-store and for instant delivery. Which implies Apple better see a better average selling price (ASP) for the iPhone when it announces its first quarter benefits.
Apple is reportedly ramping up production for the iPhone twelve in the very first half of 2021. Coupled with other things suggesting strong iPhone sales for the quarter, the taller ASP should lead to iPhone revenue greatly outperforming. And considering iPhone accounts for fifty % of revenue, and usually closer to sixty % in the earliest quarter, which must have a meaningful impact on its revenue versus expectations.
2. Suppliers are publishing huge earnings numbers
Apple’s biggest iPhone assembler, Foxconn, announced record revenue for the month of December. The Taiwanese business, which trades as Hon Hai Precision, reported sales of 713.8 billion New Taiwan dollars (about $25.5 billion) for December, and quarterly revenue of NT$2 trillion. The beat expectations of NT$1.8 trillion, as reported by Bloomberg.
Foxconn’s outperformance is in addition in line with the greater-than-expected need for the iPhone 12 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 requirement for 5G chips as the reason. Considering Apple accounts for the majority of its revenue, it’s a very great bet those chips are going in iPhone 12s.
And also in late December, Wedbush analyst Daniel Ives said his Asia supply chain checks “have today exceeded even our’ bull case scenario'” in a note to investors.
3. New documents in the App Store
Apple reported record gross sales for its App Store in its annual brand new year update. In the week between Christmas Eve and New Year’s Eve, iOS users spent $1.8 billion in the App Store. That is up twenty seven % from last year, as well as an acceleration from the sixteen % growth of sales in the exact same period of 2019. The company even recorded $540 million in sales on New Year’s Day, up about forty % from year that is previous. Those numbers suggest a good deal of new iPhones under the tree this year.
What’s more, it bodes well for Apple’s all important services segment — its fastest-growing and highest-margin business. The App Store is Apple’s most profitable service, generating yucky profits well above its subscription services as Apple Music or Apple TV. So outperformance on that front should cause better-than-expected earnings.
Morgan Stanley analyst Katy Huberty notes, “If we maintain the majority of our December quarter Apple Services forecast unchanged, the latest App Store data would imply December quarter Services revenue of $14.84 [billion]… forty [basis points] ahead of consensus at $14.78 [billion].” It is quite possible, nonetheless, that more potent App Store sales make the perfect indication of more potent sales of Apple’s other services.
It looks as the iPhone supercycle may be a reality this year depending on the early results we have seen and other hints at need that is strong . And that’ll bolster Apple’s entire company — as well as the FAANG stock — when it reports the full results of its on Jan. 27.