A bit of optimism was all that Apple needed for its stock to inch higher ahead of the Thanksgiving holiday. Shares traded ahead of the S&P 500 and Nasdaq through most of Wednesday’s session.
On November 25, Wedbush’s Dan Ives was one of the first Wall Street analysts to issue an upbeat early read on Apple’s holiday sales. According to him, there is "a clear tick up" for demand around the iPhone 12 Pro versions. He went further:
Dan Ives’ optimism contrasts with one of his peer’s more somber views published a few days.
Credit Suisse’s Matthew Cabral noted that “waits for certain iPhone 12 models have shortened, suggesting a more balanced demand-supply dynamic only a few weeks after the launch of the devices”. Time will tell which analyst will ultimately be proven right.
My take on Apple’s holiday
Generally speaking, I am cautiously optimistic about Apple’s end-of-year sales for the following reasons:
- The company enters the Black Friday weekend with perhaps the most robust lineup of products and services. Apple has recently refreshed most of its flagship devices, from the iPhone to the Apple Watch to the Mac and beyond. The company has also started to offer services as a bundle for a discounted price.
- This year’s shopping season may be quite unique due to the global pandemic. Spending habits are likely to shift away from travel and entertainment, as COVID-19 cases continue to spike, and towards goods and services that can be used at home. This dynamic could favor companies like Apple.
- Apple’s four-day shopping special around Black Friday could help to boost demand. The company is offering gift cards worth up to $150 in certain global markets. The promotion is not a new initiative, as Apple offered up to $200 in incentives this time last year.
On the flip side, I suggest investors also keep a macro-level perspective. Several fiscal stimulus programs are set to expire at the end of December, including enhanced unemployment benefits. The effect of what some have been fearing to be a “double-dip recession” can already be felt through an increase in jobless claims in the US.
Lack of general consumer firepower is, in my opinion, the biggest risk to Apple’s holiday sales in 2020.
Read more from the Apple Maven:
(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)