Apple’s stock gets expected to drop by more than 30%, claimed by one Wall Street analyst. The Apple Maven examines the negative case and the driver of a likely share price drop.
A Wall Street analyst rang the alarm on Apple shares on the opening day of the new quarter. According to Rod Hall of Goldman Sachs, investing in shares of the Cupertino company at current levels has “substantial downside risk.”
Apple’s services division is at the heart of the analysts’ concerns. Today, the Apple Maven takes a deeper look at the case and weighs in on the bearish call’s merits.
Goldman Sachs upholds the notion that Apple is only worth $83 per share, implying a more than 30% risk of loss. Worse-than-expected service revenues in 2022 are one issue that could drive the stock lower.
There are two crucial elements to the services puzzle, based on the above. First, the research firm predicts post-pandemic headwinds driven by a return to normalcy: from stay-at-home behaviors to “go outside” habits.
Now, it is not difficult to comprehend the logic here. Will consumers be as compelled to join up for services like Apple Arcade if the alternative is to seek offscreen entertainment, which was mainly unavailable in 2020 and parts of 2021?
You may even add additional danger to the App Store. This leading company has got targeted by Epic Games and other tech businesses and governments throughout the world for its role as a dominant gatekeeper of the app ecosystem.
Under duress, the Cupertino firm may get tempted to slash its commissions even further — albeit the impact would be minor for the time being.
The second part is about Apple TV+ in particular. Last year, the corporation utilized a bold marketing plan to entice new Apple gadget consumers by offering a free year of service. Goldman Sachs appears to predict that after the trial period ends in July 2021, renewal rates will be lower than expected.
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