Coronavirus Could Be Positive Catalyst for Apple App Store

Millions of Chinese people spending time at home due to the virus could mean an uptick in App store traffic and spending.
Author:
Publish date:

Analysts at Morgan Stanley are looking at the bright side, saying that there is a potential upside for Apple  (AAPL) - Get Report amid the coronavirus outbreak in China as people are confined to their houses amid the outbreak.

Specifically, Apple’s App Store could see a jump in activity as Chinese people look to ride out the burgeoning pandemic indoors while, presumably, being on their phones.

As evidence for this assertion, Morgan Stanley notes that Chinese search giant Tencent  (TCEHY)  announced last week that they are expanding server capacity to meet demand for gamers attempting to play Game for Peace, following a surge in activity during the Chinese New Year that overwhelmed the company’s servers.

Meanwhile, Jan. 2020 App Store data shows signs of increased activity, according to Morgan Stanley, with total net revenue growing 22.5% year over year, and 6% month to month.

Total App Store spending in China grew 32% year-over-year, representing the second strongest month of China App Store growth in two years.

Meanwhile, total app downloads in China grew 15% year-over-year in the month of January, up from the 2% year-over-year decline the App store experienced in December.

Morgan Stanley’s overweight thesis on the stock is as follows:

Apple has the world's most valuable technology platform with over 1.4Bn active devices, and is well positioned to capture more of its users' time and spend in areas such as music, video, augmented reality, health, autos and home.

Morgan Stanley has an overweight rating and $368 price target on the company. Apple shares were rising 0.2% Wednesday to $319.59.

Apple is a holding in Jim Cramer’s Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AAPL? Learn more now.