Apple (NASDAQ:AAPL) headed into its fiscal 2021 first quarter with expectations which are higher from investors. The highlight of Apple’s quarter was the launch of the iPhone 12, the tech titan’s very first 5G smartphone. Investors anticipated robust 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 3 of the most noteworthy developments bolstering Apple’s stock heading into its earnings report later this month.
1. You’ll still need to wait indefinitely to get an iPhone twelve Pro
It has been over 2 weeks since Apple introduced the iPhone 12 Pro, and customers buying today still have to hold back a maximum of three days for delivery. Which may as well be for years in the age of next-day delivery. By comparison, it took just six days for iPhone 11 interest to attain equilibrium with supply last year, as reported by Credit Suisse analyst Matthew Cabral. The Apple iPhone 12 Pro seen from an angle.
The regular iPhone 12 and also the iPhone twelve Mini are much more readily available both in-store and for instantaneous shipping. That hints Apple should 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. Coupled with other factors suggesting very strong iPhone sales for the quarter, the taller ASP should lead to iPhone revenue greatly outperforming. And viewing iPhone accounts for fifty % of revenue, and generally closer to 60 % in the very first quarter, that should have a significant influence on its revenue versus expectations.
2. Suppliers are publishing huge profits 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, 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 premium supplier of the high end devices.
Meanwhile, Dialog Semiconductor raised its fourth-quarter revenue outlook from a range of $380 million to $430 million to between $436 million as well as $441 million, Barron’s reports. The chipmaker cited increased demand for 5G chips as the primary reason. Considering Apple accounts for the majority of its revenue, it is a really good bet those chips are actually going in iPhone 12s.
And for late December, Wedbush analyst Daniel Ives said his Asia source chain checks “have now exceeded actually 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 the annual brand new year of its update. In the week in between Christmas Eve and New Year’s Eve, iOS users spent $1.8 billion in the App Store. That’s up twenty seven % from year which is previous, and an acceleration from the 16 % growth of sales in the exact same time of 2019. The company even recorded $540 million in sales on New Year’s Day, up about forty % from previous year. Those numbers indicate a great deal of new iPhones under the tree this year.
It also bodes well for Apple’s all important services segment — its fastest-growing and highest-margin enterprise. The App Store is Apple’s most lucrative service, generating gross earnings well above its subscription services like 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 remainder 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] in front of consensus at $14.78 [billion].” It’s very likely, nevertheless, that stronger App Store sales make the perfect indication of stronger sales of Apple’s other services.
It looks like the iPhone supercycle could be a reality this season based on the first results we have spotted as well as other hints at demand that is strong . And that’ll bolster Apple’s whole business — and the FAANG stock — if this reports the complete results of its on Jan. 27.