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Apple Crushes It and It’s All About Services, Plus Final Hints on Tesla
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MICHAEL KRAMER AND THE CLIENTS OF MOTT OWN SHARES OF AAPL, NFLX, AND TSLA
Apple
For a phone that supposedly nobody wanted, the iPhone X, and 8’s seem to be doing rather well. Consider that unit growth was up 3 percent versus last year, while revenue increased by 14 percent. Not only that but the average selling price per phone was at nearly $730 per unit, up almost $74 from last year. That is a big jump.
But what was most impressive to me for the latest Apple quarter, was the service revenue growth of 8 percent sequentially, and 31 percent over last year. Consider, that in the quarter service revenue account for 15 percent of total revenue versus only 13 percent in the quarter a year ago.
The service revenue is Apple’s future, and just as content is king on TV, the same will hold true of our phones. That transition is already happening, and I think when 5G hits, then we will see just how big Apple’s services are. The speeds of 5G allow full-length films to be download in just seconds.
I read the call notes from TheFly.com; it said subscribers grew by 60 percent over last year to 300 million. According to my math, it gives Apple an average revenue per user of about $10 per month, on par with a Netflix. That number can likely grow though over time.
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Netflix
Speaking of which, $333 is a battleground in Netflix stock, and for today at least the bulls won. My hunch is they will continue to win at that price, and the stock is likely heading higher from these levels.
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Tesla
Tesla goes tomorrow. It will be a big earnings report, and Panasonic said it is now expecting it battery business with Tesla to add to its profits starting in October, as Model 3 production continues to pick up in pace. I’d think they may be a positive read through to Tesla.
That is going to be it for today.
-Mike
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#APPLE #TESLA #NETFLIX #EARNINGS
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Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.