Apple Crushes It and It’s All About Services, Plus Final Hints on Tesla
MICHAEL KRAMER AND THE CLIENTS OF MOTT OWN SHARES OF AAPL, NFLX, AND TSLA
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.
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.
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.
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