Please try another search
© Reuters. Apple (AAPL): Weaker-than-expected May App Store Growth a Headwind to June Q Results - Morgan Stanley
By Senad Karaahmetovic
Morgan Stanley analyst Keith Weiss took note of the net revenue growth deceleration observed in Apple’s (NASDAQ:AAPL) App Store for the month of May.
The growth fell to +4% Y/Y in May on the back of the broad-based deceleration across all regions except the US. The App Store previously saw 8% Y/Y growth for April.
For Weiss, App Store’s May results were “weaker than expected.”
“One of the main drivers of May App Store weakness was China, which accounts for 26% of total T12M App Store spend. In May, App Store net revenue growth in China decelerated 8 points M/M to just +3% Y/Y, despite a 3 point easier Y/Y compare. We believe this implies April results (of +11% Y/Y) were likely aided by renewed COVID lockdowns in major metropolitan cities, and May's results reflect a moderation of demand as some areas slowly re-opened. New video game license approvals also likely aided April App Store results in China, with China gaming net revenue growth decelerating 8 points M/M in May, to +6% Y/Y,” Weiss wrote in a client note.
By categories, only 2 categories saw the new revenue growth accelerate in May with Gaming - the largest sector - decelerating 5 points from April.
All in all, the analyst sees downside risk to MS’ June quarter App Store forecast of +15% Y/Y.
“While we believe Apple user spending is more resilient at all stages of the economic cycle, which positions Apple better than other consumer hardware peers, a deceleration in App Store growth likely points to fading consumer spending on goods/services that accelerated during the pandemic. While we are bullish on the longer-term App Store and Services outlook, a deceleration in App Store growth (and monetization) could be a near-term headwind to results,” Weiss added.
Still, Weiss sees a path for App Store growth to return to more healthy numbers beyond the June quarter.
“With the health of the consumer and the potential shifting nature of consumer spending patterns a key debate entering the summer months, an acceleration in App Store growth could help to dispel the bear concern of a more permanent App Store slowdown,” the analyst concluded.
(Reuters) - The U.S. Centers for Disease Control and Prevention said it is probing an E.coli bacteria outbreak in four states from an unknown food source, with many of the...
By Rachael Levy (Reuters) - Elon Musk has approached brain chip implant developer Synchron Inc about a potential investment as his own company Neuralink plays catch-up in the race...
By Caroline Valetkevitch NEW YORK (Reuters) - U.S. stocks fell on Friday in a broad selloff led by megacaps as U.S. bond yields rose, with the S&P 500 posting losses for the week...
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
I feel that this comment is:
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.