Apple Card: An Overlooked Opportunity
Apple stock rallied on Monday, reaching intra-session gains of 2.5% in the early afternoon. It is likely that, aside from macroeconomic and political factors, shares were supported by a bullish sell-side note from Cowen’s analyst Krish Sankar.
$1 billion opportunity
According to Mr. Sankar, Apple Card is shaping up to be an emerging contender in the fintech space. He notes:
What caught my attention the most were the analyst’s numbers around the revenue opportunity. He believes that Apple’s payment platforms will contribute $1 billion to the company’s top line in 2020, and that the figure will double within two years. However, in terms of earnings impact, the 2- to 3-cent contribution to EPS would be much less impressive.
The Apple Maven’s take
Should Apple’s payment platforms generate the expected $2 billion in revenues by 2022, this business alone would be large enough to qualify as a Fortune 1000 company today – trailing by only a small margin well-known businesses like Groupon and Fossil Group. This is impressive, considering that the Apple Card (forecasted by Cowen to be Apple’s largest payment product by 2023) is barely one year old.
As I mentioned a few months ago, I continue to see the Apple Card as an important piece of the company’s ecosystem. While Cowen’s estimates point at an enticing stand-alone business opportunity, the indirect benefit of the Apple Card to other product and service sales could be even more valuable. Think about Apple’s ability to offer zero percent and cash-back deals through its card, and how these payment benefits to consumers can help to boost demand for the iPhone, iPad and other devices.
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(Disclaimers: the author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)