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Apple Stock: Will It Rally after Today’s Event?

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On September 10, Apple (AAPL) is scheduled to hold a special event. Many people, from gadget freaks to loyal investors, wonder what the company will unveil today. There are rumors that the event will showcase the company’s next line of iPhones, a model for the Apple Watch, and much-anticipated services like Apple TV.

During the event, investors expect the company to unveil the iPhone 11 and iPhone 11Pro. Also, there might be an update to the iPhone XR model.

The event will be held in the Steve Job Theatre on the company’s California campus in Cupertino. Investors can tune into the event on Apple’s website at 10:00 AM PT. For the first time, the company will live stream the event on YouTube.

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What are the event’s main expectations?

In a research note, the IDC stated that it isn’t hoping for a 5G version of the iPhone until next year. However, Ming-Chi Kuo, an Apple analyst, indicated that the new iPhone models would have reverse wireless charging. Some analysts also claim that the iPhones would support Apple Pencil—a wireless stylus pen. The latest iPhone line up might feature the company’s new A13 chip, a lightning port for audio and charging, and a new Taptic Engine. Bloomberg reported that the new iPhones would be tougher to crack with the “shatter-resistance” technology.

Pricing in the services segment

There’s a sense of mystery around today’s event. At the company’s March product launch event, it didn’t shed any light on many critical details including the pricing for Arcade and Apple TV+. The ambiguity didn’t impress investors. Apple closed at $188.74 on March 25 and fell to $186.79 the next day. For the next few days, the stock price hovered around $188 without any significant movement. We’ll have to see if the company reveals the pricing details for its new products during today’s event.

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iPhones have been Apple’s sales driver since 2008. From fiscal 2013 to fiscal 2018, the company has seen steady growth in the sales contribution from iPhones from 53.4% to 62.8%. However, things are gradually changing. The contribution from iPhones fell below 50% in the June quarter. The company faces stiff competition from high-end smartphones like the Samsung Galaxy Note 10+. Many people don’t think that iPhone upgrades are “revolutionary” anymore.

What can investors expect from Apple?

We think that investors want to see the pricing details for Apple’s recently launched services more than its new iPhones. The company has been looking to counter lower iPhone revenues through the App Store, Apple Pay, iCloud, and Apple Music. The company wants to turn Apple TV+, Arcade, and Apple News+ into recurring revenue sources. In fiscal 2018, the company’s services segment posted 24% YoY (year-over-year) growth to $37.2 billion. Around 36% of the growth came from the App Store. In the June quarter, the company’s service revenues were $11.45 billion. The company aims to double its 2016 services revenues by 2020. Apple is on track to achieve its goal. The company aims to reach services revenues per quarter of $14 billion by 2020.

Reports indicate that Apple TV+ could cost between $9.99 and $12.99 per month, while Arcade could cost about $4.99 per month. With established players like Netflix (NFLX) and Amazon (AMZN), it will be interesting to see whether Apple TV+ manages to get attention at this price.

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Ravie Lakshmanan, a tech analyst, also expects a programming update for the Apple TV+. The update would make Apple TV+ compatible with Arcade. Leif Johnson, the associate editor at Macworld, expects that the company might be like Amazon Prime and offer a discounted bundle of services. A bundle would compromise Apple Music, iCloud, News+, Arcade, Apple TV+, and Apple Care Plus.

Daniel Ives, a Wedbush analyst, claimed that Apple CEO Tim Cook might also launch a teaser of the waterproof version of Airpod, due sometime around the holidays.

Apple stock could be influenced by the event

The company recovered after a significant dip in its share price from $213.04 to $193.34 in the first week of August. The share price touched $212.46 on August 22. There has been a steady rise despite minor fluctuations. In the last few days, the shares have risen amid optimism surrounding today’s event. The shares posted a 2.6% month-to-date gain and closed at $214.17 on Monday.

The excitement around today’s event is contagious. In the past, the company’s September events have influenced its stock price movements. Investors will be disappointed if Apple doesn’t impress them with today’s event. Also, there could be a sell-off. However, if the company announces positive surprises during the event, I expect the share price to reflect the same buoyancy.

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