Apple, Alphabet, Amazon, and Facebook, which combined are worth almost $5 trillion dollars[1] all releasing earnings on the same day seems crazy. From what I could find, that is 14% (5T/35T) of the total stock market posting earnings on the same day [2].
I'm curious if anyone has thoughts on what effect that has on the overall market in terms of volatility? (I really have no good idea as to how any of this works) Could we see other stocks dip/rise as money is reallocated?
There's a concept in the options trading world called "correlation skew," which describes how tail risk for baskets like SPY/QQQ/XLK can trade richer than tail risk for the basket components, based on how much correlation there is expected to be in the components. When correlation is expensive, you can buy option contracts on the basket components and sell contracts on the basket itself, to set up a position that profits when the basket components exhibit dispersion rather than correlation.
Sure, we could see sector rotation into tech tomorrow. This may be somewhat muted because tech is already a very crowded trade, and tech names are already trading far higher than where they closed.
The timing is based on quarter end dates. There’s a season of a few days each quarter when everyone on a standard calendar reports. Similar companies move together on the assumption of “if Walmart has good earnings, Target should too”
There is only so many trillions to be invested in stocks (because, where else?), and they have already been invested. Stock markets have for so long had a totally irrational relationship with day-to-day news, that they probably won't move the needle much.
First and foremost, the stock market is not the economy. Second, stocks are primarily traded on their expected future value, not current profits, hence why companies like Tesla have a price to earnings ratio that is absurd.
> This paper proposes that idiosyncratic firm-level shocks can explain an important part of aggregate movements and provide a microfoundation for aggregate shocks.
> Existing research has focused on using aggregate shocks to explain business cycles, arguing that individual firm shocks average out in the aggregate. I show that this argument breaks down if the distribution of firm sizes is fat-tailed, as documented empirically.
> The idiosyncratic movements of the largest 100 firms in the United States appear to explain about one-third of variations in output growth.
You are missing Microsoft, worth now over 1.5T in your analysis. I dont even know what that means... Three times Facebook. Also Google numbers look not as bright compared to the other.
While market cap may not be the actual realisable value of the company, that doesn't mean it's irrelevant. It's perfectly relevant when comparing the relative value of different companies, especially when they are in similar sectors. That's especially true when companies have very different numbers of issued shares.
Even then, market cap does actually correlate directly to realisable value in acquisitions. They rarely trade for exactly the market cap, but it's definitely a useful benchmark against which to compare the company's relative value to the acquirer and it's current owners.
I guess this is the biggest argument for breaking up the tech giants -
not only are there clear examples of each company either abusing public trust or using their size in anti-competitive ways, but their wealth shields them from having to meaningfully engage with the public at large or reign in said behavior.
There are alternative to each of the four. No one forces anyone to use any of their products.
Definitely no one forces people to buy Apple’s products at a large premium over their competitors. I would say that Apple has to work harder to get users to willingly depart with their cash.
Wow, iPad revenue up 31% YoY after being down ~10% in the last few quarters. Similar numbers to a Q1 (holiday season). I guess it makes sense that the tablet form factor is popular when so many people are indoors.
Also, services revenue grew YoY but it’s the first time it didn’t grow QoQ in a long time, so it seems to have stagnated. Services include a lot of recurring revenue so they should be consistently growing QoQ.
Wearables growth also slowed, this may be the other side of the coin when people are indoors and don’t want to buy a watch for fitness tracking.
My partner and I bought our God Daughter an iPad for her sixth birthday because we were worried about her not being in school. We installed a bunch of educational apps for her. She loves it. We also get to FaceTime with her and our relatives which is fun. I’m sure a lot of iPads were bought for kids stuck at home. (Edit typo)
I just shipped my parents my 2016 iPad with cellular with my unlimited T-mobile data plan. I removed all of the unneeded apps, installed all of the streaming apps that either I had a log in to, they had a log in to with their cable subscription, and the free streaming apps. I put both of their email addresses in Mail. I also put Office 365. My mom already has one of my six accounts.
Since I can’t see them because of Covid, I can now Facetime them. It was frustrating talking to my dad since he is losing his hearing. He can understand me a lot better when he can see me and FaceTime audio is much clearer than phone calls.
Got my nephew the $329 iPad, and its been great. No major complaints. We initially got him a similarly priced Chromebook, as they’re education targeted, but quickly returned. The Chromebook was unexpectedly sluggish and cumbersome.
>Wow, iPad revenue up 31% YoY after being down ~10% in the last few quarters. Similar numbers to a Q1 (holiday season). I guess it makes sense that the tablet form factor is popular when so many people are indoors.
I wonder how much this has to do with the release of iPadOS 13, which has made the iPad a significantly more capable "computer" than previous versions of the operating system. For the majority of users (you don't fall into this category, fellow Hacker News reader), the capabilities of iPadOS are quickly approaching that of macOS.
Personally I regret the new OS features; I find them clumsy and bothersome. I love the iPad overall though. (I’ve been all in on Apple since ‘08 for context.)
iPadOS 13, the new keyboard with trackpad and a cloud VPS mean even for typical HNers the capabilities of iPadOS are quickly approaching that of macOS. For me, it’s totally replaced my laptop. I still need a desktop because a fair number of very specific things are a PITA on the iPad but in general it offers a much nicer UX than my previous ThinkPad.
> For the majority of users (you don't fall into this category, fellow Hacker News reader), the capabilities of iPadOS are quickly approaching that of macOS.
Huh wow, I haven't thought about iPads for a while, but apparently they even added multiple windows (predictably, 5 years late). That's probably the biggest blocker I considered that made tablets a toy even for laymen users (you hardly need to be a leet haxorz to use multiple windows)
The pandemic definitely pushed me to get an iPad. Since my primary source of income is in tutoring in math/CS, being able to draw diagrams with accuracy and share those drawings live with my students has been extremely valuable. Before all this, most of my income was from in-person clients where I could simply grab a piece of paper and pen and draw, now I'm 100% online.
What iPad app are you using for this? And do you also have an Apple Pencil? I also do some math online tutoring, and what I’ve been doing is connecting my iPhone to my Mac, mirroring the iPhone screen on the Mac, and sharing that screen during a Skype call. Then I can use the camera app on the iPhone (mounted on a little tripod) to look down on a piece of paper that I write/draw on. I considered getting an iPad, but even with an Apple Pencil I imagine I wouldn’t feel as free as when drawing on a real piece of paper with a real pen, I’m curious as to what your thoughts on this are
My guess for this is the fact that they have a fantastic entry level iPad at a very low price. It's basically the cheapest entry point into the Apple ecosystem at ~$300 (often discounted to $250). And they've shown they're happy to hold this price with the new iPad they released last year as well. Considering iPadOS and support for Pencil, it's a pretty good deal, and I can imagine its bringing a lot of people in.
Picked up this exact one, maxed out the storage but WiFi-only, with an Apple Pencil. It hasn’t obviated my laptop which I do entirely different work on, but it has almost completely obviated my phone since I can route calls through it. I was planning to buy a new phone this year, but seeing as how it gets about 5 minutes of weekly active usage on average since I bought this iPad, which is like 99% camera and 1% Apple Pay, don’t think there would be much point in that.
This has also replaced paper notebooks for me which is what I bought it to do, and I had a pretty sizable book collection on my phone which has been shunted over.
>Services include a lot of recurring revenue so they should be consistently growing QoQ.
You will need to examine Apple's Services Revenue more closely. Apple puts $10/ unit to Services as OS / Map / Siri usage. Considering Apple had record iPhone / iPad / Mac Shipment per quarter.
Google paid Apple roughly $10 per year per Active User as default search placement. Or Roughly $10B per year.
App Store is by far the largest source of Services Revenue.
Considering Apple said in the conference call all of their Apple Services users are growing ( Referring to TV+, Music and News, but we dont know if those are paying members because the TV+ membership could easily be skewed. ). The only variable in QoQ decline is likely App Store Revenue.
80% of App Store Revenue are Gaming. So this suggest people are buying less in game items.
This also might be by design. Apple has to know that Apple Arcade is going to cause less people to spend money on pay to win games. If Apple Arcade encourages more hardware sells, they would be okay with that.
If every single pay to win an advertiser supported game disappeared, nothing of value would be loss.
iPad had a spring product launch last quarter which makes a big difference. The previous generation of iPad Pro was more than 18 months prior. iPad sales are pretty weird in terms of cyclicality since launch dates are so random between models.
Tim specifically addressed the wearables decline as a result of store closures during the pandemic. He pointed to the fact that potential new watch customers prefer to try on the watch and view the band options in person before purchasing, and closed stores means this is not possible.
I doubt this is sufficiently explanatory, but Apple has been giving away 1 year of Apple TV with their iPad purchases. That's arguably the most valued among all their services.
>The Board of Directors has also approved a four-for-one stock split to make the stock more accessible to a broader base of investors. Each Apple shareholder of record at the close of business on August 24, 2020 will receive three additional shares for every share held on the record date, and trading will begin on a split-adjusted basis on August 31, 2020.
AAPL's previous 7:1 split happened at $700, bringing the price back down to $100. This split fits in that same vein. It would seem that the board feels "accessible" is in the $100 range, if that's what you're trying to read into the situation.
I'm curious. Do trading platforms automatically adjust existing limit orders the night of August 24, e.g. dividing all prices by 4? (Or just cancel all limit orders?)
I mean I would assume they do, but just wonder if there are ever any severe "gotchas" with a stock split with certain existing buy/sell arrangements, or derivatives etc.
I haven't worked on trading systems in the US, but handling this type of gotcha is the bread and butter of the sort of trading software I have been working on.
There's a million tiny details like this that can cause consequences that are both different from what a customer intended and what our terms with said customer states, so making sure it's all handled in a safe way is just part of daily business.
Are stock splits necessary now that many brokerages have fractional shares? It seems the true metric is percentage gained or lost rather than the price.
One thing to note is stock price dramatically impacts the price of options.
For example 1 option contract for Amazon (over $3k share price) can easily be $4,000. In comparison, you can buy 1 option for Apple ($400) contract for $200. After the stock split, option contracts will be 1/4 the current price.
Lower stock prices make the options market much more accessible to people investing less money (for better or worse).
I don’t think splits are necessary. Fractional shares are an abstraction of share ownership though. Many people prefer not to rely on their broker for that.
There is no such thing as "split price". You get 4 shares for each share you previously owned, and it's up to the market to resume trading at a new level. It's a non-event, really, except it makes some operations easier.
Possibly, but its really however the market prices it.
For example, if the theory goes that more people will want to buy apple now that the price is a "steal" (people think it's harder to 2x a big number than a small number) then it could go above that on open.
Given the high rates of unemployment in the US and around the world (with possibly worse to come) this kind of consumer spending on luxury goods is pretty remarkable. Wonder how sustainable it is.
There's a good argument to be made that Apple devices are not luxury goods but save you money in the long run.
They often last for many more years than competitors' products, receive upgrades for longer, become obsolete less quickly, and Apple will repair them both under warranty and out of warranty. (Many competitors simply do not service their products.) And when you're finally done with your device, you can often still resell it on eBay and get even further value from it, again often for much more than with competitors' products of the same age.
Apple products on the lower end tend to be fantastic investments actually. And given how much we're working from home now, your primary devices for remote communication are hardly "luxury" and more "essential".
You reminded me of the last time I spent money on a laptop before mac. Well, it wasn't me, it was my parents.
For half the price of new mac air, I got a Toshiba budget notebook. It barely lasted 2 years, which was the amount it's "anything happens" warranty expired - which wasn't really anything happens. The CD ROM just didnt slide back in totally one day and stuck. The shift key got so fucked up I had to disable it preboot or I'd be stuck with caps. Fun times. Never again. Made me appreciate macs way more when I got one.
Oldest phone that gets iOS updates is what, the 6s or the 7? The former having come out in 2015, that is an amazing support lifetime.
I’m planning on keeping my iPhone X past the end of the year, which takes it to a 3 year lifetime, which works out as ~$600/year which is amazing value.
that was definitely not my experience when I bought a macbook air a decade ago. after a year it was unusuably slow, and the insulation at some point flaked off the charger wire. i went with a thinkpad in the same form factor after that (a year later), and I'm still using that today
>They often last for many more years than competitors' products
Apple products are often obsolete in a few years, especially iPads and iPhones. Their entire line of laptops and desktops is now practically obsolete with the move to ARM. Apple products are luxury products for people who can afford to simply throw away a device when Apple decides it's stopping support. I have several Apple devices that still boot up just fine, have capable CPUs inside, but are completely useless because Apple just decided they weren't interested in supporting them anymore.
An iPhone is the durable personal computer for most people. They don't own a "PC", this is the only way to safely conduct e-commerce. Without it, you're done in the modern world (even government interactions, like scheduling a DMV visit).
A necessity, not a luxury.
Best security, best long term support, best re-sale value.
If you're poor, an iPhone is the smartest choice.
You need to AFFORD an Android device.
A smartphone is probably one of the most essential and important devices in many peoples lives these days. Certainly one of the most used. There is the option of Android instead of Apple, but as someone pointed out one time, iPhones are cheaper than flagship Android devices if you account for the support lifetime of an iPhone being a lot longer than any Android device. And that's not counting the cheaper iPhone Apple launched recently.
Likewise, for many people, a computer would probably be considered an essential device. Sure there are cheaper Windows laptops, but the cost of switching ecosystems is potentially quite high, and if you're already in the i-device camp you're probably going to stick with a Mac due to its integration with all the other things you have (and had before the pandemic)
iPad Pros for non-business use may be luxury devices, but the 'regular' iPad is down to $329 now, solidly low end- especially now that iPad OS has mouse support built in and Safari supports requesting desktop mode pages.
I have a lot of trouble characterizing tools as luxury goods. I don't consider my Dewalt tools "Luxury Goods" and they cost roughly twice what basic Harbor Freight tools cost.
You pay for longevity and performance. It's no different with phones/ tablets/ computers. If you want a phone or tablet that lasts 4+ years there is only one brand that offers that kind of device life.
Also, with Apple cranking out the base iPhone at $400, and the massive second hand market for iPhone, it's hard to argue many people associate the brand with luxury the way they do Coach or other luxury brands.
If anyone thought Apple was a "luxury" brand, the flop of the solid gold Apple Watch "Edition" sub-brand should have disabused them of the notion.
I'd be fascinated to see a breakout of Apple's quarterly sales by product. I don't know if such a thing is published, and if so I've been unable to find it, but I had also wondered what fraction of it the SE 2 would account for. I remember seeing headlines that it was selling above expectations shortly after launch, but there wasn't any real detail that I recall.
Interestingly, spending on luxury/positional goods does not decline when the economy is poor. This is a well-known effect. That is not where people tend to cut back.
If you looked solely at Apple's revenue during 2008/2009 you wouldn't even know there was a crash, never mind one that was severe by any measure.
I don't disagree with your point (it is pretty interesting!) but I do think 2008 – one year after the iPhone was introduced – is a bit of a special scenario for Apple that isn't broadly applicable to other stocks/downturns.
Maybe a tangent here, but I don't think it's accurate to think about Apple stuff as luxury goods.
For example, I don't think the volume they do in phones aligns with the typical notion of a luxury brand. The best-selling single smartphone model on the market is the iPhone. In analogy with the car market: BMW, Mercedes, Lexus do not have a best-selling model among them.
The iPhone is more like the Ford F-150, in terms of how it fits into the broader marketplace, than it is like a luxury car. The F-150 is not inexpensive! But it's not a luxury vehicle either.
Why am I bothering with this argument... because I think it leads to confusion about Apple's business, like the comment above. Apple does well because they sell products people want, on the high end of the range, but well within what a lot of people can afford.
A Ford F-150 is absolutely a luxury vehicle. And I don't see any way you can look at an Apple iPhone as anything other than a luxury purchase, regardless of the market share.
If you live in an expensive NY/CA metro, that money can be the difference between unemployment benefits covering your rent or mortgage payment or not, which is a very big deal.
California's unemployment benefit caps out at $450/week.
> If you don't live in NY or CA, those extra $600 a week can go very far
True. My girlfriend lost her job March. She is unemployed since then. We are not based in NY or CA. She has mentioned this to me several times that how much more she has in savings now. With all this time and some extra cash, I have asked her learn coding. She is working on her app idea.
Plus, a lot of employed people got checks from the first round of stimulus -- $1200 per individual, $2400 for a married couple, and $500 per child. That's just free money for people who didn't lose their jobs. Some households have earned more during the pandemic than ever before.
That's likely reduced entertainment expense of eating out and of traveling and vacations shifting at least partially to other areas. An iPhone costs a lot, but so does a week long vacation in another state, and eating out a couple times a week, and those are less likely for a lot of people now.
Anecdotally, our app spending is up a lot since the quarantine began—my kids (6 yo twins) got iPads for their birthday and we've probably spent at least $50 on apps for them alone (a mix of educational apps and games). I imagine there's a lot of educational app purchases happening in general.
As an aside, we use new apps as a reward for various exceptional acts. My son looked at my phone not long after we started this and told me that I must have done a lot for my mom to have put so many icons on my phone.
There are other examples as well. For me, it is RVs. Generally people only buy them when they're feeling good about the future, so you'd expect uncertainty to be devastating right now. Nope, dealers are moving them as fast as they can get them in stock, and they're not budging on price. Normally you only pay about 2/3 MSRP for an RV. Not right now.
Sucks because I want to upgrade to something a little bigger, and I don't want to pay an extra 10K just to have it right now. So I'll wait until January and see if the dealer is feeling more agreeable.
I don’t think RVs are a good indicator. My wife and I just bought a 32’ Class A motorhome to travel around the country in the fall, since I’m forced to work remotely and the kids will be doing school remotely. If there were no pandemic, we would have never dreamed of buying one.
Wouldn't surprise me if a lot of people are buying new phones while they're sure they can, to avoid the risk of being stuck with an old and potentially failing one when they can't.
Phones are luxury goods only up to a point. Especially once you're invested in an app store, it can cost a good deal to switch platforms. And it should be news to no one that having access to communications grows more, not less, important, the closer you get to stony broke.
> Wouldn't surprise me if a lot of people are buying new phones while they're sure they can, to avoid the risk of being stuck with an old and potentially failing one when they can't.
I think you're incorrectly assuming people are good at any form of long term financial planning...
My iphone se2 was 400$. I got it at 50% off, so $200.
That's not luxury by any means, and is price competitive even with the cheapest of android phones.
Apple's lower price-point offerings might have old hardware, but its more than made up for it by just working & offering long-term support. Something no android phone can match.
Regarding Facebook ads: We are in the throes of a general election cycle, I'm curious how much of the slack that has been picking up. Anecdotally I am seeing tons of political ads across the internet.
I am also curious if increased internet usage in general is compensating for lower PPC as people are stuck at home.
You just had an entire planet told that they were going to stay at home, and that school-age children needed some type of device to learn through. That must have driven some percentage of new sales.
Many sectors are slashing their marketing budgets, especially their vaguely-targeted mass-marketing or big-incumbent-brand marketing.
But Facebook's ad engine allows micro-targeting, and is especially valuable to upstarts & small-businesses in times of changing behavior/consumer-loyalties.
To the extent big spenders free up inventory, Facebook has bidders-in-the-wings, offering just-a-little-less, and plenty of impressions among the 2.99 billion people who visit one of the Facebook family-of-sites monthly.
We'd have to see the product breakdown, but it's possible this could be explained by more people working from home and home schooling; people are likely spending more time on devices like tablets and laptops. If iPhone sales are up, that would indeed be remarkable.
Remarkable either way because Apple stores were closed for most of the quarter.
You're right. The work-from-home angle could be part of it.
My company recently announced everyone is staying home for at least the next 10 months, and is trying to get hundreds of iPhones for everyone who didn't have a company-issued phone before.
The company my wife works for is half at work, and half at home right now, but everyone is getting new phones, just in case.
I never thought of it as a luxury. Actually quite the opposite. A luxury is something that I pay a lot of money for but don’t use it a lot. For me at least. The price per minute used is quite low...
Here in the UK between working from home and "remote schools" (i.e. schools moving online because of the lockdown) spending on things like home offices, laptops, etc. went up.
If you're stuck at home you probably and in any case spend more time online and/or on your phone, which has to be good for whoever owns online app and music stores. (This also explains Facebook's good results).
All in all, it's not surprising that results are good for Apple. But it is not sustainable growth.
Looking at the numbers, both iPad and Mac sales exceeded estimates, iPhone was inline.
Seems likely a lot of this came from laptop and iPad sales for work-from-home, and home education respectively, as opposed to frivolous luxury consumer spending.
People are saving a lot of money too from not having to commute, entertainment, travel, etc. that spending shifted to consumer goods. Plus, government handed out a lot of free money on too of that.
I don't know if I would classify Apple products as strictly luxury, certainly not in the same sense as a Casio vs a Rolex, a Jansport vs Gucci, or a studio vs a 1 bedroom, Honda vs a BMW, staycation watching Disney+ vs trip to Disney.
When I think of cutting back on luxury, I am looking for things with a very high incremental cost to incremental value ratio. Apple products could be one but it would be farrrr down the list speaking for myself and others I know.
What makes you think companies aren’t buying these for use due to COVID? Doctors and nurses video conferencing patients, schools switching to e-learning, and any other businesses sending workers home who may or may not have a computer. Certain industries might also be switching to FaceTiming/Video Conferencing customers.
Hasn't consumer spending (at least at some level, not completely) been propped up by the unemployment assistance and CARES act checks? I wonder how much spending on these kinds of goods might drop if that assistance goes away.
Don't forget that they've just released a new MacBook Air and iPhone SE. In hindsight this was the perfect time to be releasing cheap devices like this.
ipads for education, mac's etc. working from home can drive sales, as folks need mobile equipment. and most sane companies are able to let a user choose equipment. in the small to medium shops it's less costly to run mac equipment than windows in the long run due to saner security requirements etc.
you can buy a new Nokia 2.2 android phone for $100 on Amazon. it works perfectly for 99% of what you might ever need to do. phones are now at the point where PCs were in 2010--commoditized and at a technical peak. so there is no longer a compelling reason for the average person to buy the newest most expensive model every year. Apple should be dying. maybe it's delayed and we'll see Apple's first decline in revenue in 2-3 years.
Anecdotally that is totally the case for me - I’ve been spending money on lots of tech and random fun items. Despite my purchases though my spending is overall down because I’m not eating out, going on trips/vacations.
Readit News
I'm curious if anyone has thoughts on what effect that has on the overall market in terms of volatility? (I really have no good idea as to how any of this works) Could we see other stocks dip/rise as money is reallocated?
[1] https://www.cnbc.com/2020/07/29/big-tech-including-apple-and... [2] https://siblisresearch.com/data/us-stock-market-value/
Sure, we could see sector rotation into tech tomorrow. This may be somewhat muted because tech is already a very crowded trade, and tech names are already trading far higher than where they closed.
> This paper proposes that idiosyncratic firm-level shocks can explain an important part of aggregate movements and provide a microfoundation for aggregate shocks.
> Existing research has focused on using aggregate shocks to explain business cycles, arguing that individual firm shocks average out in the aggregate. I show that this argument breaks down if the distribution of firm sizes is fat-tailed, as documented empirically.
> The idiosyncratic movements of the largest 100 firms in the United States appear to explain about one-third of variations in output growth.
[0] http://pages.stern.nyu.edu/~xgabaix/papers/granular.pdf
Even then, market cap does actually correlate directly to realisable value in acquisitions. They rarely trade for exactly the market cap, but it's definitely a useful benchmark against which to compare the company's relative value to the acquirer and it's current owners.
Definitely no one forces people to buy Apple’s products at a large premium over their competitors. I would say that Apple has to work harder to get users to willingly depart with their cash.
Also, services revenue grew YoY but it’s the first time it didn’t grow QoQ in a long time, so it seems to have stagnated. Services include a lot of recurring revenue so they should be consistently growing QoQ.
Wearables growth also slowed, this may be the other side of the coin when people are indoors and don’t want to buy a watch for fitness tracking.
Since I can’t see them because of Covid, I can now Facetime them. It was frustrating talking to my dad since he is losing his hearing. He can understand me a lot better when he can see me and FaceTime audio is much clearer than phone calls.
I bought an iPad Air and a pencil to take notes.
Any educational apps you can recommend?
I wonder how much this has to do with the release of iPadOS 13, which has made the iPad a significantly more capable "computer" than previous versions of the operating system. For the majority of users (you don't fall into this category, fellow Hacker News reader), the capabilities of iPadOS are quickly approaching that of macOS.
Huh wow, I haven't thought about iPads for a while, but apparently they even added multiple windows (predictably, 5 years late). That's probably the biggest blocker I considered that made tablets a toy even for laymen users (you hardly need to be a leet haxorz to use multiple windows)
This has also replaced paper notebooks for me which is what I bought it to do, and I had a pretty sizable book collection on my phone which has been shunted over.
You will need to examine Apple's Services Revenue more closely. Apple puts $10/ unit to Services as OS / Map / Siri usage. Considering Apple had record iPhone / iPad / Mac Shipment per quarter.
Google paid Apple roughly $10 per year per Active User as default search placement. Or Roughly $10B per year.
App Store is by far the largest source of Services Revenue.
Considering Apple said in the conference call all of their Apple Services users are growing ( Referring to TV+, Music and News, but we dont know if those are paying members because the TV+ membership could easily be skewed. ). The only variable in QoQ decline is likely App Store Revenue.
80% of App Store Revenue are Gaming. So this suggest people are buying less in game items.
If every single pay to win an advertiser supported game disappeared, nothing of value would be loss.
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https://sixcolors.com/post/2020/07/apple-q3-2020-results-eve...
It's very curious to me how and why different companies decide whether this is important or not.
I mean I would assume they do, but just wonder if there are ever any severe "gotchas" with a stock split with certain existing buy/sell arrangements, or derivatives etc.
There's a million tiny details like this that can cause consequences that are both different from what a customer intended and what our terms with said customer states, so making sure it's all handled in a safe way is just part of daily business.
Options are also split to take the stock split into account.
Trading platforms shouldn't have to do anything unless they are faking GTC orders by resending them out each day as Day orders.
But if your vendor is doing that then, get a new vendor as that's completely bush league.
For example 1 option contract for Amazon (over $3k share price) can easily be $4,000. In comparison, you can buy 1 option for Apple ($400) contract for $200. After the stock split, option contracts will be 1/4 the current price.
Lower stock prices make the options market much more accessible to people investing less money (for better or worse).
For example, if the theory goes that more people will want to buy apple now that the price is a "steal" (people think it's harder to 2x a big number than a small number) then it could go above that on open.
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They often last for many more years than competitors' products, receive upgrades for longer, become obsolete less quickly, and Apple will repair them both under warranty and out of warranty. (Many competitors simply do not service their products.) And when you're finally done with your device, you can often still resell it on eBay and get even further value from it, again often for much more than with competitors' products of the same age.
Apple products on the lower end tend to be fantastic investments actually. And given how much we're working from home now, your primary devices for remote communication are hardly "luxury" and more "essential".
I’m planning on keeping my iPhone X past the end of the year, which takes it to a 3 year lifetime, which works out as ~$600/year which is amazing value.
My two broken Macbooks in 3 years say otherwise.
This might have been true 5 years ago, but the countless complaints of keyboard issues with 2017-19 era Macbooks says otherwise.
Apple products are often obsolete in a few years, especially iPads and iPhones. Their entire line of laptops and desktops is now practically obsolete with the move to ARM. Apple products are luxury products for people who can afford to simply throw away a device when Apple decides it's stopping support. I have several Apple devices that still boot up just fine, have capable CPUs inside, but are completely useless because Apple just decided they weren't interested in supporting them anymore.
A necessity, not a luxury. Best security, best long term support, best re-sale value. If you're poor, an iPhone is the smartest choice. You need to AFFORD an Android device.
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A smartphone is probably one of the most essential and important devices in many peoples lives these days. Certainly one of the most used. There is the option of Android instead of Apple, but as someone pointed out one time, iPhones are cheaper than flagship Android devices if you account for the support lifetime of an iPhone being a lot longer than any Android device. And that's not counting the cheaper iPhone Apple launched recently.
Likewise, for many people, a computer would probably be considered an essential device. Sure there are cheaper Windows laptops, but the cost of switching ecosystems is potentially quite high, and if you're already in the i-device camp you're probably going to stick with a Mac due to its integration with all the other things you have (and had before the pandemic)
I would count iPads as largely luxury devices.
I have a lot of trouble characterizing tools as luxury goods. I don't consider my Dewalt tools "Luxury Goods" and they cost roughly twice what basic Harbor Freight tools cost.
You pay for longevity and performance. It's no different with phones/ tablets/ computers. If you want a phone or tablet that lasts 4+ years there is only one brand that offers that kind of device life.
Also, with Apple cranking out the base iPhone at $400, and the massive second hand market for iPhone, it's hard to argue many people associate the brand with luxury the way they do Coach or other luxury brands.
If anyone thought Apple was a "luxury" brand, the flop of the solid gold Apple Watch "Edition" sub-brand should have disabused them of the notion.
If you looked solely at Apple's revenue during 2008/2009 you wouldn't even know there was a crash, never mind one that was severe by any measure.
For example, I don't think the volume they do in phones aligns with the typical notion of a luxury brand. The best-selling single smartphone model on the market is the iPhone. In analogy with the car market: BMW, Mercedes, Lexus do not have a best-selling model among them.
The iPhone is more like the Ford F-150, in terms of how it fits into the broader marketplace, than it is like a luxury car. The F-150 is not inexpensive! But it's not a luxury vehicle either.
Why am I bothering with this argument... because I think it leads to confusion about Apple's business, like the comment above. Apple does well because they sell products people want, on the high end of the range, but well within what a lot of people can afford.
If you don't live in NY or CA, those extra $600 a week can go very far, and have probably helped stimulate the economy greatly
California's unemployment benefit caps out at $450/week.
True. My girlfriend lost her job March. She is unemployed since then. We are not based in NY or CA. She has mentioned this to me several times that how much more she has in savings now. With all this time and some extra cash, I have asked her learn coding. She is working on her app idea.
600 a week is 2400 a month, which way over any entry level salary in Europe.
How inflated are the salaries in US? Or are people used to some really abnormal level of living?
As an aside, we use new apps as a reward for various exceptional acts. My son looked at my phone not long after we started this and told me that I must have done a lot for my mom to have put so many icons on my phone.
Sucks because I want to upgrade to something a little bigger, and I don't want to pay an extra 10K just to have it right now. So I'll wait until January and see if the dealer is feeling more agreeable.
Usually RVs are bought in addition to other travel, they are more of a luxury item.
In the current environment where booking a hotel is considered by some risky RVs are bought as a necessity if one wants to travel.
Phones are luxury goods only up to a point. Especially once you're invested in an app store, it can cost a good deal to switch platforms. And it should be news to no one that having access to communications grows more, not less, important, the closer you get to stony broke.
I think you're incorrectly assuming people are good at any form of long term financial planning...
That's not luxury by any means, and is price competitive even with the cheapest of android phones.
Apple's lower price-point offerings might have old hardware, but its more than made up for it by just working & offering long-term support. Something no android phone can match.
I am also curious if increased internet usage in general is compensating for lower PPC as people are stuck at home.
But Facebook's ad engine allows micro-targeting, and is especially valuable to upstarts & small-businesses in times of changing behavior/consumer-loyalties.
To the extent big spenders free up inventory, Facebook has bidders-in-the-wings, offering just-a-little-less, and plenty of impressions among the 2.99 billion people who visit one of the Facebook family-of-sites monthly.
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Remarkable either way because Apple stores were closed for most of the quarter.
My company recently announced everyone is staying home for at least the next 10 months, and is trying to get hundreds of iPhones for everyone who didn't have a company-issued phone before.
The company my wife works for is half at work, and half at home right now, but everyone is getting new phones, just in case.
If you're stuck at home you probably and in any case spend more time online and/or on your phone, which has to be good for whoever owns online app and music stores. (This also explains Facebook's good results).
All in all, it's not surprising that results are good for Apple. But it is not sustainable growth.
Seems likely a lot of this came from laptop and iPad sales for work-from-home, and home education respectively, as opposed to frivolous luxury consumer spending.
When I think of cutting back on luxury, I am looking for things with a very high incremental cost to incremental value ratio. Apple products could be one but it would be farrrr down the list speaking for myself and others I know.
If congress really does not extend benefits, there's bound to be a sizable negative effect.
The vast majority of Apple products and services are no where near "luxury" prices.
It is like leasing a car, except it is a hand computer.
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