Apple (NASDAQ:AAPL) headed into its fiscal 2021 very first quarter with expectations which are high 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 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 on this month.
1. You still need to wait forever to get an iPhone 12 Pro
It has been more than 2 weeks since Apple released the iPhone twelve Pro, and customers purchasing nowadays still have to wait a maximum of three days for shipping. Which might as well be for years in the era of next-day shipping. By comparison, it took just 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 seen from an angle.
The regular iPhone 12 and the iPhone 12 Mini are much more readily available both in store and for instantaneous 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 12 in the first half of 2021. Coupled with other factors 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 earliest quarter, that need to have a significant impact on the revenue of its versus expectations.
2. Suppliers are posting big revenue 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 (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 additionally in line with the greater-than-expected demand for the iPhone 12 Pro. The business is the exclusive 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 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 is a pretty great bet those chips are going in iPhone 12s.
And for late December, Wedbush analyst Daniel Ives said his Asia supply 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 its App Store in its annual new year update. In the week in between Christmas Eve along with 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 16 % growth in sales of the exact same time in 2019. The company also recorded $540 million in sales on New Year’s Day, up almost 40 % from previous year. Those numbers indicate a good deal of new iPhones under the tree this season.
Additionally, it bodes well for Apple’s all-important services segment — its fastest-growing and highest-margin business. The App Store is Apple’s most lucrative service, generating yucky profits well above its membership services as Apple Music or Apple TV. So outperformance on that front should 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 new 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 is most likely, nonetheless, that more potent App Store sales are a good indication of more potent sales of Apple’s other services.
It looks like the iPhone supercycle may be a reality this season depending on the first results we’ve noticed as well as other hints at demand which is strong. And that’ll bolster Apple’s whole business — as well as the FAANG stock — in the event it reports the full results of its on Jan. 27.