Apple (NASDAQ:AAPL) headed into its fiscal 2021 very 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 very first 5G smartphone. Investors anticipated excellent sales as wireless carriers force their 5G networks and build excitement around the brand new iPhones. All signs indicate 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 around indefinitely to get an iPhone twelve Pro
It has been above two weeks since Apple introduced the iPhone 12 Pro, and customers buying today still need to hold back as many as three months for shipping and delivery. Which may as well be for decades in the age of next-day delivery. By comparison, it took just 6 weeks for iPhone 11 demand to reach equilibrium with supply last year, based on Credit Suisse analyst Matthew Cabral. The Apple iPhone twelve Pro seen from an angle.
The regular iPhone 12 and the iPhone 12 Mini are much more being sold both in store and for instantaneous delivery. Which implies Apple must see a higher average selling price (ASP) for the iPhone when it announces the first-quarter results of its.
Apple is reportedly ramping up production for the iPhone twelve in the earliest 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 fifty % of revenue, and typically closer to 60 % in the very first quarter, which need to have a significant influence on the revenue of its versus expectations.
2. Suppliers are posting huge 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 (about $25.5 billion) for December, and quarterly revenue of NT$2 trillion. That beat expectations of NT$1.8 trillion, as reported by Bloomberg.
Foxconn’s outperformance is in addition in line with the greater-than-expected demand for the iPhone 12 Pro. The company 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 and $441 million, Barron’s reports. The chipmaker cited increased demand for 5G chips as the main reason. Considering Apple accounts for the vast majority of its revenue, it’s a pretty great bet those chips are going in iPhone 12s.
And in 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 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 is up 27 % from year that is previous, and an acceleration from the sixteen % growth of sales of the exact same period in 2019. The company even recorded $540 million in sales on New Year’s Day, up almost 40 % from year which is previous. Those numbers suggest a lot of new iPhones underneath the tree this year.
It also bodes well for Apple’s all important services segment — its highest-margin and fastest-growing business. The App Store is actually Apple’s most lucrative service, generating yucky profits well above its membership services like Apple Music or Apple TV. So outperformance on that front must result in better-than-expected earnings.
Morgan Stanley analyst Katy Huberty notes, “If we maintain 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] ahead of consensus at $14.78 [billion].” It’s most likely, however, that stronger App Store sales are a good indication of stronger sales of Apple’s other services.
It looks as the iPhone supercycle might be a reality this year based on the first results we’ve noticed and other hints at demand which is strong. And that’ll bolster Apple’s whole business — as well as the FAANG stock — when it reports its complete results on Jan. 27.