Is Jefferies Right about Apple’s Streaming Services?

Apple’s new service

In this series so far, we’ve discussed some of the factors that could be affecting Apple’s (AAPL) iPhone sales in emerging markets such as China. We’ve also analyzed the steps the company is taking to revive its Product segment’s sales.

Let’s move on by taking a look at Apple’s much-discussed video streaming service and what one Jefferies analyst has to say about it.

Is Jefferies Right about Apple’s Streaming Services?

Video streaming

According to a recent Reuters report, AAPL is planning “to introduce a streaming television service” in April 2019. Citing unnamed sources, the report also suggests that the company’s video streaming service could “include subscription TV services from CBS Corp, Viacom Inc and Lions Gate Entertainment Corp’s Starz among others as well as its own original content.”

In the global market, other US tech companies (XLK) Netflix (NFLX) and Amazon Prime Video (AMZN) are likely to be the main competitors for Apple’s video streaming service.

As of February 15, AAPL and NFLX have risen 2.4% and 5.1%, respectively, so far in the month, while Amazon has fallen 6.4% compared to the 2.6% rise in the NASDAQ Composite Index (VTI).

Jefferies analyst’s view

While Apple’s latest move to strengthen its Services segment by launching a video streaming service could make many investors hopeful, Jefferies analyst Tim O’Shea doesn’t seem impressed. Last week, O’Shea said, “It’s going take a long time for this type of service to really move the needle,” according to Business Insider. He added, “iPhone declines are by far the dominant trend,” saying also, “Services at this point are not big enough to offset that pressure.”

In the quarter that ended in December 2018, Apple’s Services segment contributed only 12.9% to its total revenue, and the remaining 87.1% of its revenue came from its Product segment.

Continue to the next article, where we’ll take a look at Wall Street analysts’ consensus ratings and target prices on Apple stock.