Apple (NASDAQ:AAPL) headed into its fiscal 2021 first quarter with expectations that are higher from investors. The highlight of Apple’s quarter was the launch of the iPhone 12, the tech titan’s 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 advancements bolstering Apple’s stock heading into its earnings report later on this month.
1. You’ll still have to wait indefinitely to get an iPhone twelve Pro
It’s been over two weeks since Apple introduced the iPhone twelve Pro, and clients purchasing today still need to wait as many as 3 weeks for shipping and delivery. Which should be for years in the age of next day delivery. By comparison, it took just 6 weeks for iPhone 11 demand to achieve equilibrium with supply last year, based on Credit Suisse analyst Matthew Cabral. The Apple iPhone 12 Pro observed from an angle.
The normal iPhone twelve as well as the iPhone twelve Mini are much more readily available both in store and for immediate shipping. That hints Apple must 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 very first half of 2021. Coupled with other things suggesting very strong iPhone sales for the quarter, the higher ASP should lead to iPhone revenue significantly outperforming. And considering iPhone accounts for 50 % of revenue, and usually closer to sixty % in the first quarter, that need to have a meaningful 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 (about $25.5 billion) for December, and quarterly revenue of NT$two trillion. The beat expectations of NT$1.8 trillion, as reported by Bloomberg.
Foxconn’s outperformance is also in line with the greater-than-expected need for the iPhone twelve Pro. The business is the exclusive 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 requirement for 5G chips as the reason. Considering Apple accounts for the vast majority of its revenue, it is a really good bet those chips are going in iPhone 12s.
And also in late December, Wedbush analyst Daniel Ives said his Asia source chain checks “have today exceeded even 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 new year of its update. In the week between Christmas Eve and New Year’s Eve, iOS computer users spent $1.8 billion in the App Store. That is up twenty seven % from year that is previous, plus an acceleration from the sixteen % growth in sales in the exact same time of 2019. The company also recorded $540 million in sales on New Year’s Day, up nearly 40 % from last year. Those numbers indicate a good deal of new iPhones under the tree this season.
Additionally, it bodes very well for Apple’s all important services segment — its highest-margin and fastest-growing enterprise. The App Store is actually Apple’s most lucrative service, generating gross earnings well above the subscription services of its like Apple Music or maybe Apple TV. So outperformance on that front must result in better-than-expected earnings.
Morgan Stanley analyst Katy Huberty notes, “If we keep the majority 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 advance of consensus at $14.78 [billion].” It’s 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 season based on the early results we’ve seen as well as other hints at need which is intense. And that’ll bolster Apple’s whole company — and the FAANG stock — if this reports the full results of its on Jan. 27.