Although the exclusion of AR/VR-related announcements disappointed a group of Apple (NASDAQ:AAPL) stock investors, the annual Worldwide Developers Conference 2022 (WWDC22) revealed plenty of exciting changes and products.
The most notable highlights of the event were the introduction of the new iOS 16 for iPhone, the brand new M2 chip which will be used for the new MacBook Air and MacBook Pro 13, as well as Apple’s entry into the Buy Now Pay Later (BNPL) territory.
WWDC22 Highlights
After the first glimpse of iOS 16, it seems like Apple’s main focus was customization. Users will be able to have personalized lock screens with different clock looks, fonts, and widgets.
Different notable changes include the ability to edit messages, changes to its Wallet by including more partners for wireless keys, and major improvements to Maps.
The M1 processor was a game-changer upon its release, and the M2 will look to boost performance even more, making it Apple's most powerful processor to date. The Air will also get a redesigned body with a larger screen and a weight of just 2.7 pounds.
Mac users will also be able to update their macOS with the new Ventura OS which brings changes to productivity and privacy through the new password-less verification system called “passkey.”
The FaceTime app will be updated across all devices, allowing users to easily switch calls from one device to another, and even use your iPhone as a webcam with the new Continuity Camera.
Safari update will add a new “Shared Tab Groups” which will let users share their latest shopping picks with friends and family while the new Safety Check tool is looking to help victims of domestic abuse by allowing users to deny access to data and location-sharing.
The new WatchOS9 brings significant improvements when it comes to fitness tracking and health. Users will be able to gather a lot more information during a workout, and the new Sleep Stages feature will use a heart-rate sensor to track users' different sleep states.
For the first time, The Health app will also allow users to schedule their medication-taking reminders.
iPad OS16 also brings improvements with many new features, especially with the addition of a new app called Freeform, a collaborative whiteboard app for real-time sharing between users working on the same project.
BNPL Entry Confirmed
Apple is planning to launch its own BNPL solution to challenge the fintech giants, including Klarna, Square, and Affirm Holdings Inc (NASDAQ:AFRM). One of the most exciting event updates will allow users to make the payment through evenly-split six month installments, with zero interest and no fees.
This announcement came as a little surprise given previous media reports that Apple is considering launching its own BNPL service.
The BNPL service, titled “Apple Pay Later,” will become available for US users of Apple devices who will be able to complete their payments in four installments over a period of six weeks, with no interest or other fees.
"Apple Pay Later makes it easy to view, track, and repay Apple Pay Later payments within Wallet. Users can apply for Apple Pay Later when they are checking out with Apple Pay, or in Wallet," the company said in its press release.
The feature will function through Mastercard’s network at any Apple Pay-supported location, including both online and physical stores. Apple’s foray into the BNPL space comes after its recent buyout of the UK credit checking startup company Credit Kudos.
But Apple’s push into financial products started several years ago as a part of its plan to drive sales through services like Apple Music and iCloud storage. In 2019, the company teamed up with Goldman Sachs (NYSE:GS) and Mastercard (NYSE:MA) to roll out a credit card for US consumers, charging no annual fees.
The decision to launch its own BNPL feature comes as the e-commerce boom that rose rapidly during the coronavirus pandemic starts to fade. The BNPL service providers are now seeing a notable slowdown, with US and European regulators closely watching fintech companies to ensure they are providing short-term credit responsibly amid record-high inflation.
Moreover, industry analysts believe that defaults and lower non-discretionary spending will dent the profit margins of major fintech companies, while higher interest rates could elevate the operating costs of some companies.
Can Apple Stock Recover?
Apple stock price is down over 17% year-to-end (YTD), compared to the S&P 500’s drop of 13.3% over the same period, as the tightening financial condition continues to weigh on the stock market.
The bulls will hope that Apple’s massive stock buyback program, as well as the fact that the company recently increased its dividend payout, can help the stock price to recover once the macro environment becomes more tech-friendly.
Investors should not forget that Apple spent $85.5 billion to repurchase shares in its fiscal 2021. Given the approved $90 billion in stock buybacks, Apple is likely to use lower prices to continue buying back its shares at affordable prices.
In the meantime, the investor focus will be on how well Apple can grapple with supply chain headwinds and recent lockdowns in China. As long as the iPhone demand remains durable and the App Store continues to record revenue growth, the bullish Apple stock thesis is very likely to remain intact.
Conclusion
Apple’s long-awaited WWDC22 event started this week and yielded no big surprises. Still, the Cupertino-based tech titan launched a new M2 chip for MacBook, introduced the new iOs 16 for its iPhone lineup, and finally launched its own BNPL service.
The bulls will hope that the continued innovation can help accelerate revenue growth and provide financial support for the continuation of the Apple stock buyback program.