Apple (NASDAQ:AAPL) headed into its fiscal 2021 very first quarter with high expectations 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 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 on this month.
1. You still need to wait around forever to get an iPhone 12 Pro
It’s been approximately two weeks since Apple released the iPhone 12 Pro, and clients buying today still need to wait a maximum of three weeks for shipping and delivery. Which might as well be forever in the age of next-day shipping. By comparison, it took just six days for iPhone 11 demand to attain equilibrium with supply last year, as reported by Credit Suisse analyst Matthew Cabral. The Apple iPhone twelve Pro seen from an angle.
The regular iPhone twelve and also the iPhone 12 Mini are much more being sold both in-store and for immediate delivery. Which 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 12 in the first half of 2021. Combined 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 50 % of revenue, and usually closer to 60 % in the very first quarter, that should have a meaningful influence on its revenue versus expectations.
2. Suppliers are posting 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. That beat expectations of NT$1.8 trillion, according to Bloomberg.
Foxconn’s outperformance is in addition in line with the greater-than-expected demand for the iPhone twelve Pro. The business enterprise is the exclusive supplier of the high end devices.
Meanwhile, Dialog Semiconductor raised the fourth quarter revenue outlook of its from a range of $380 million to $430 million to between $436 million and $441 million, Barron’s reports. The chipmaker cited increased need for 5G chips as the reason. Considering Apple accounts for the majority of the revenue of its, it’s a pretty great bet those chips are 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 files in the App Store
Apple reported record gross sales for its App Store in its annual 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’s up 27 % from year which is last, and an acceleration from the sixteen % growth of sales in the exact same period in 2019. The company also recorded $540 million in sales on New Year’s Day, up almost forty % from last year. Those numbers indicate a great deal of new iPhones under the tree this season.
In addition, it 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 yucky earnings well above its subscription services as Apple Music or perhaps Apple TV. So outperformance on that front must lead to better-than-expected earnings.
Morgan Stanley analyst Katy Huberty notes, “If we keep 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] in advance of consensus at $14.78 [billion].” It is most likely, nevertheless, that more potent App Store sales are a good 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 along with other hints at strong need. And that’ll bolster Apple’s entire business — and also the FAANG stock — in the event it reports the complete results of its on Jan. twenty seven.