Apple TV Minus

Apple TV Minus

over 4 years ago2 mins

Mentioned in story

Apple’s annual product launch event last week included details of pricing for its forthcoming TV streaming service (as well as trypophobia-triggering new iPhones). But not everybody was happy… 😠

What's going on here?

The CEO of Disney has sat on Apple’s board of directors for the last eight years. Now he’s leaving. That’s perhaps unsurprising – Disney is about to launch a rival game-changing streaming service of its own.

But he may also have taken exception to Apple’s aggressive pricing strategy. At $4.99 a month in the US – or free for a year with any new device – Apple TV+ is designed to undercut streaming rivals. Disney’s service, also due to drop in November, will cost $6.99 a month…

Both companies are going below the belt
Both companies are going below the belt

But besides a $6 billion bill for original streaming content, analysis from Goldman Sachs suggests that Apple’s launch strategy will lead to its profit taking a hit.

Goldman believes Apple plans to partially treat the free trial offer as a discount on hardware – reducing the profit margin on, say, a new iPhone. The investment bank has therefore significantly lowered its estimated price for Apple shares in a year’s time – to around a quarter lower than the company’s current stock valuation 😱

Why should I care?

While their value has risen almost 40% in 2019, Apple’s shares remain worth less than they were twelve months ago. And should they sit 25% lower a year from now, you’d likely feel the pinch personally.

Apple's share price over the last 12 months
Apple's share price over the last 12 months

Such tech stocks are firm favorites of millennial stock investors. Furthermore, as one of the biggest companies in the US, Apple’s share price has a large impact on the value of the stock market as a whole.

That means a 25% drop could take a chunk out of your retirement account – especially if it was accompanied by a broader “bear market” for stocks. But hey – at least there’ll be more TV to watch, right? 😉

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