AAPL Stock: If Apple Wants to Reignite Growth it Needs to Go Big on This

Goldman contends Cupertino should go big on content and launch an Amazon Prime-like service.


Apple, Inc (NASDAQ:AAPL) stock was last trading Tuesday at $118.08, up 0.46%. The name however, fell along with the broader market on Monday, despite a new report by Goldman Sachs’ (NYSE:GS) Simona Jankowski and Drew Borst, writing that Cupertino should offer an iPhone subscription bundle, in the model of Amazon.com‘s (NASDAQ:AMZN) “Prime” service, not only as a way to reinforce iPhone loyalty while  leveraging it into content, but also to reignite growth.

The analysts also argue that although Apple has the power to “turn the razor/blade model upside down”, the company needs to invest with urgency in an “Apple Prime” subscription bundle priced at around $50 a month, which would include the iPhone, Apple Music, Apple TV, Apple original content, and potentially live sports.

According to the Goldman team, which maintains a ‘Buy’ rating on Apple shares. earnings per share generated by “Apple Prime” customers would be over 10% accretive by fiscal year 2021.

Speaking of earnings ; Apple is scheduled to release its fourth-quarter earnings 2016 on October 25. The Street is looking for EPS of $1.66 and revenue of $5.26 billion. Last quarter, the company posted a positive earnings surprise of 2.90%, reporting EPS of $1.42, $0.04 better than the Street’s consensus estimate of $1.38. Revenue however, fell 14.52% year-over-year to $42.4 billion versus the $49.6 billion reported. Meanwhile, EarningsWhisper.com reports a whisper number of $1.75 per share.

Shareholders and scalpers can look for more color on the company’s business when the results go live.

Apple Stock Action

Apple stock printed a lower than average trading volume during Monday’s session with the issue trading 20.24 million shares, compared to the average volume of 36.42 million. The stock began trading at $117.33 to finish the session down $0.10 or 0.09% from the prior days close of $117.63. On an intraday basis it got as low as $116.78 and as high as $117.83.

Apple shares have advanced 1.78% in the last 4 weeks and 18.47% in the past three months. Over the past 5 trading sessions the stock has gained 3.13%. The $633.30 billion market cap company has a median Street price target of $125 with a high target of $185.

Apple stock is up 7.41% year-over-year and 13.65% year-to-date.

In other Apple news, the tech giant has moved $9 billion worth of the intellectual property connected with iTunes from Luxembourg to Holyhill, just outside of Cork city, Ireland, Appleinsider reports, citing The Business Post, a Sunday paper distributed nationally in Ireland which says the move will have significant benefits to the Irish Revenue, netting the entity tens of millions of euros in value-added taxes.

The publication also notes that the shift “comes on the back of changes to the European VAT system which have ended the benefits of housing the intellectual property in Luxembourg,” where Apple’s international iTunes business has been operating since 2004.

Cupertino’s plans to relocate first surfaced last month, when the company announced that iTunes, Cupertino’s massively successful music-sharing service which is used by millions of people worldwide, will be managed at the campus in Holyhill.

“Apple has been operating in Ireland since 1980 and now employs nearly 6,000 people. As we continue to expand our operations in Cork, we are moving our iTunes business there and will support content stores for more than 100 countries from our campus at Hollyhill,” the company said in a recent statement.

Earlier this year, Apple was granted planning permission for a major extension to Hollyhill, involving a brand new four-storey office block and 750 new parking spaces. The company also announced plans to hire up to 1,000 more staff for its Irish operation.

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