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 twelve, the tech titan’s first 5G smartphone. Investors anticipated strong sales as wireless carriers push 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 on this month.
1. You still need to wait forever to get an iPhone twelve Pro
It’s been above 2 months since Apple introduced the iPhone 12 Pro, and clients purchasing today still have to hold back as many as 3 weeks for shipping and delivery. That might as well be forever in the era of next-day delivery. By comparison, it took only six months for iPhone 11 interest to achieve equilibrium with supply last year, based on Credit Suisse analyst Matthew Cabral. The Apple iPhone 12 Pro observed from an angle.
The regular iPhone 12 and the iPhone 12 Mini are much more being sold both in-store and for immediate shipping. Which suggests Apple better see a higher 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. 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 fifty % of revenue, and usually closer to sixty % in the earliest quarter, that must have a significant impact on the revenue of its 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 business, which trades as Hon Hai Precision, reported sales of 713.8 billion New Taiwan dollars (about $25.5 billion) for December, and quarterly revenue of NT$two trillion. That beat expectations of NT$1.8 trillion, as reported by Bloomberg.
Foxconn’s outperformance is also in line with the greater-than-expected demand for the iPhone twelve Pro. The business enterprise is the premium supplier of the high end products.
Meanwhile, Dialog Semiconductor raised the fourth quarter revenue perspective of its 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 need for 5G chips as the reason. Considering Apple accounts for the vast majority of the revenue of its, it is a really good bet those chips are going in iPhone 12s.
And in late December, Wedbush analyst Daniel Ives said his Asia supply chain checks “have today exceeded actually our’ bull case scenario'” in a note to investors.
3. New records in the App Store
Apple reported record gross sales for its App Store in the annual new year of its update. In the week between Christmas Eve and New Year’s Eve, iOS users spent $1.8 billion in the App Store. That’s up twenty seven % from previous year, plus an acceleration from the sixteen % growth of sales of the exact same period of 2019. The company also recorded $540 million in sales on New Year’s Day, up nearly 40 % from previous year. Those numbers suggest a great deal of new iPhones under the tree this season.
What’s more, it bodes well for Apple’s all important services segment — its highest-margin and fastest-growing business. The App Store is Apple’s most lucrative service, generating gross profits well above its membership services as Apple Music or perhaps Apple TV. So outperformance on that front should 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]… 40 [basis points] in advance of consensus at $14.78 [billion].” It is most likely, nevertheless, that more potent App Store sales make the perfect indication of stronger sales of Apple’s other services.
It looks as the iPhone supercycle could be a reality this season depending on the early results we’ve noticed as well as other hints at intense need. And that’ll bolster Apple’s whole business — and also the FAANG stock — when it reports its complete results on Jan. 27.