Apple Earnings: Addressing The Hot Questions Of The Week
Jim Cramer has weighed in on Apple stock, as we stand less than a week away from the company’s fiscal third quarter earnings day. Jim has reinforced his bullishness, believing that the early innings of the 5G cycle is not the right time to sell shares.
Now, the Street Lightning channel has begun collecting questions for Jim’s and Katherine Ross’ special show, scheduled to go live on Apple’s earnings day. I took the liberty to answer a few of the ones that have come in so far. See the readers’ questions below, followed by my answers.
- What should we expect from Apple services this quarter?
That is a good question. We can look at "hints" to try to come up with a good answer.
Think of Microsoft's strong results that came out this week. Personal computing led the revenue charge. Consumers are clearly still very much at home on their computers, portable devices and gaming consoles. This is good news for Apple's services.
I estimate that the App Store represents one-third of service revenues. So, if the App Store does well, services in general should too. In that sense, I have come across third-party data that suggests an increase in app downloads in the second calendar quarter of about 20%. Again, this is another piece of good news for Apple.
I have recently written more about what to expect of the App Store.
- Why would Goldman advise to sell Apple? Wouldn't that hurt their own partnership of running their credit card?
Analyst Rod Hall has been a bear for a while, and he just reiterated his opinions. Until very recently, he had been the only one on the Street with a "sell" rating on Apple – Wolfe Research initiated on the stock on Friday with a sell too.
Anyway, research departments at banks need to act independently from all other divisions. It is what became known as "Chinese Wall", back when regulation was put in place. So the Apple Card should not direct the analyst's opinions, and that makes sense to me.
I have an article on Goldman Sachs' bearish views prepared and ready to publish on Sunday morning, July 26. Keep an eye on it.
- How long should I hold Apple?
If we only knew for sure... this is a bit of a personal question, I think.
Jim Cramer seems to be a "buy-and-forget" bull at least through the 5G cycle. I think that the company is in very solid footing and well-positioned for the long run. I only fear (1) valuations having already priced in too much of Apple's future success and (2) regulatory risk on antitrust and other matters, to a lesser extent.
Again, it is a bit of a personal thing. If an investor is bullish but feeling uneasy here, and would sleep better at night after trimming a bit of the position, I'd understand that too.
I wrote earlier this month about holding Apple stock in the third quarter.
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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)