Apple (NASDAQ:AAPL) headed into its fiscal 2021 first quarter with high expectations 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 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 this month.
1. You still must wait indefinitely to get an iPhone twelve Pro
It has been more than 2 weeks since Apple introduced the iPhone twelve Pro, and customers purchasing today still need to wait as many as three days for delivery. Which may as well be forever in the age of next-day delivery. By comparison, it took only six days for iPhone 11 demand to achieve equilibrium with supply last year, according to Credit Suisse analyst Matthew Cabral. The Apple iPhone 12 Pro seen from an angle.
The standard iPhone twelve and also the iPhone twelve Mini are a lot more being sold both in-store and for immediate shipping. Which hints Apple better see an improved 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 first half of 2021. Coupled with other things suggesting very 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 generally closer to sixty % in the first quarter, that should have a meaningful impact on its revenue versus expectations.
2. Suppliers are publishing big 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 (aproximatelly $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 also in line with the greater-than-expected demand for the iPhone 12 Pro. The company is the exclusive supplier of the high end products.
Meanwhile, Dialog Semiconductor raised its fourth quarter revenue perspective 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 primary reason. Considering Apple accounts for the majority of its revenue, it’s a really good bet those potato chips are actually going in iPhone 12s.
And also 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 records in the App Store
Apple reported record gross sales for its App Store in its annual new year update. In the week 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 year that is last, as well as an acceleration from the 16 % growth of sales of the same time in 2019. The company even recorded $540 million in sales on New Year’s Day, up nearly forty % from previous year. Those numbers suggest a lot of new iPhones under the tree this season.
It also bodes well for Apple’s all-important services segment — its highest-margin and fastest-growing enterprise. The App Store is actually Apple’s most profitable service, generating yucky profits well above its membership services like 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 rest 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 quite possible, nevertheless, that stronger App Store sales are a great indication of stronger sales of Apple’s other services.
It looks as the iPhone supercycle may be a reality this year based on the first results we have noticed and other hints at intense demand. And that’ll bolster Apple’s whole business — and the FAANG stock — if this reports its full results on Jan. twenty seven.