Apple Card May Be the Company’s ‘Secret Santa’



Apple Card (AAPL) could prove to be a hidden gem for the iPhone maker. On November 29, CNBC reported D.A. Davidson analyst Tom Forte said, “AirPods Pro [is] a good product, but I think the story for Apple’s holiday sales this year is in payments with the Apple Card.”

We know that Apple isn’t just known for its iPhone business anymore. AirPods and Apple Watch are here to write new growth stories. However, another catalyst could be Apple’s Goldman Sachs–backed credit card.

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Reporting on Forte’s comments, CNBC wrote, “Although Apple’s overall business is ‘less dependent’ on selling iPhones, he said, Apple’s credit card will serve as a feeder to its hardware products ecosystem. Apple Card will allow users to purchase iPhones free of interest for 24 months.” Forte has rated Apple stock as “buy” and set its price target at $300, which implies a 13% upside.

Apple Card will boost Apple’s ecosystem

Forte’s optimism stems from Apple CEO Tim Cook’s indication of a subscription-based model for iPhones. Cook has stated that Apple Card could be used to purchase iPhones with 0% interest and 3% cashback. Therefore, the card could significantly boost the company’s subscription business, as well as its hardware sales.

Long-term users of Apple’s credit card are loyal to iOS and unlikely to switch to Android. And the card’s offer of interest-free iPhone purchases would naturally boost the card’s sales in the holiday season. As people purchase iPhones, Apple would also get the opportunity to sell them other services, such as Apple Arcade, Apple TV+, and Apple Music. Apple’s credit card could also lure more users to Apple Pay and Apple Wallet. Therefore, Apple Card could be a gateway to Apple’s entire ecosystem.

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Furthermore, according to TechCrunch, Nike is offering 3% cashback on Apple’s credit card transactions. The sporting retailer has a symbiotic relationship with Apple. For example, there’s a Nike edition of the Apple Watch Series 5 available. Apple Card’s use for buying these unique products on Nike platforms could boost sales in Apple’s wearables segment. Apple plans to add more retail partners to its co-branded program, which could further increase Apple sales.

Nike announced its Apple cashback offer at a most convenient time, right before Black Friday, Cyber Monday, and the holiday season.

Goldman Sachs–backed card could boost holiday sales

Apple has always seen its highest sales in the holiday quarter. In fiscal 2020’s first quarter, Cowen expects the company’s revenue to rise year-over-year to $90 billion from $88.3 billion. As Apple launched its less costly iPhone 11 series during the last ten days of the fourth quarter, the market will have to wait for holiday sales numbers for more clarity on the iPhone 11’s success. There’s widespread optimism that iPhone sales could rebound in the first quarter due to the more affordable models. Apple’s credit card could make iPhones even more affordable.

Recently, the Goldman Sachs–backed credit card had to face criticism due to alleged gender-biased credit limit approvals. Although hard evidence of damage from that bias hasn’t yet come to light, the news highlights Apple’s need to focus more on compliance standards to ensure success.


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