Goldman Sachs cut its price target for Apple shares to $165 from $187, making the firm’s expectation for Apple the lowest of the major Wall Street banks.
Michael Sheetz and John Melloy for CNBC:
Goldman Sachs just significantly slashed its price target for Apple, predicting 26% downside to the shares because of a “material negative impact” on earnings for the accounting method the iPhone maker will use for an Apple TV+ trial.
“We believe that Apple plans to account for its 1-year trial for TV+ as a ~$60 discount to a combined hardware and services bundle,” wrote Goldman analyst Rod Hall, in a note. “Effectively, Apple’s method of accounting moves revenue from hardware to Services even though customers do not perceive themselves to be paying for TV+. Though this might appear convenient for Apple’s services revenue line it is equally inconvenient for both apparent hardware ASPs and margins in high sales quarters like the upcoming FQ1′20 to December.”
Hall explained that Apple has taken “a very similar approach” to its accounting methods before, for so-called “embedded services” such as Apple Maps and its Siri artificial assistant. The Goldman analyst expects the free trial TV+ revenues will add 25% to Apple’s gross margin contribution, which, due to the lower product revenue, will result “in a negative calculated impact to EPS of 16%” for fiscal first quarter 2020, Hall said.
MacDailyNews Take: Hall is assuming the free trial for customers buying any new iPhone, iPad, Apple TV, Mac or iPod touch to last for one year, which makes sense, as Apple will have built up an audience and the makings of a content library after Apple TV+’s first year.
Read the full CNBC article for an example of how Hall expects Apple to account for Apple TV+’s one year free trial for buyers here.
Sounds like Goldman trying to cover a major short position
Goldman? Never. Most ethical financial institution in the country. No really. Honest!
I believe whatever is posted by REAL capitalists. nuff said…
So what they are saying is the since Apple has already spent the money making the shows that there is still going to be a cost to this? There is also a nice hit piece over on market watch saying iPhones are inferior to Android.. LOL
“for the accounting method the iPhone maker will use”
Wait, what? He’s discounting Apple’s shareprice based upon the accounting method Apple will use?
Exactly. They will still have earned the same revenue, it’s just that iPhone revenue will appear smaller than it otherwise would have (which could still be above what it is now), and Services revenue will appear larger than it otherwise would have.
Mostly fear-mongering.
I’m cutting up my new Goldman Sachs credit card — oh wait.
Can’t speak to viruses, but they need to rethink their ad “style”. “Edge” and the other ad that steals space in the lower part of the mobile frame are like flies at a picnic. My focus is to remove them before consuming any content. No need to read/observe the ad content…just kill/remove.
In contrast, the “scrolling” ad type can’t be killed and they’re without the obtrusiveness. Sometimes I actually look at them. No one comes to a site for the ad, but some ads are WAY more irritating than others. MDN…maybe it’s time to Think Different about what works. Ads should make you $$. People should be inclined/intrigued to view them?
While I’m talking about the MDN experience, why the “restart” at the top of the list of articles after one is read…every time? 9 to 5 Mac offers a continuous sequential reading experience, so, the next article is “fresh” and not requiring another scroll-thru to find one’s place in the “not-yet-read.” It’s not the klunky and not very “tech-smart” MD.N experience
Hello, have just told the ad network to only serve very small Edge ads to iPhones and, if that is not possible, to stop serving those ads to iPhones altogether. Thank you for your feedback!
I have been following MDN for years, but due to the ads and virus warnings I don’t use it daily anymore and would never recommend it or share articles with friends anymore. It’s no longer my ‘go to’ for Apple news because of the constant ads all over my screen.
Exactly. It makes this website experience (on a smartphone) like navigating a mine field.
Investors are pounding AAPL shares hard, like a sailor on shore leave visiting the local brothel.
Massive, relentless liquidation of shares is ongoing with prices plunging -$5 a share and dropping in extremely heavy selling.
This is a LOT more than hit piece….or you think millions of shareholders are dumb as dirt.
Yes. I do.
Well then, you are as dumb as a rock then.
Most of the millions who are selling probably are more traders than they are investors, and they are just simply taking profits. Investors will hang on and watch the stock price rise once again.
Meanwhile, you can’t find a bad word from Goldman about Netflix, no matter how much they spend to try to drive subscriber numbers. Pretty clear their own book is long NFLIX, short AAPL, and they will do anything to drive their own returns.
I call extreme bull$hit
Am I the only one who thinks it’s messed up that the bank that is “partnered” to provide Apple’s credit card service, is the same one that is bashing the financial growth???? Something is really messed up here…