It has been an impressive year for Apple Inc. (NASDAQ: AAPL), as the stock increased by more than 25% since January 1st, 2019 through now. Investors hope that Apple’s strategic shift towards services business after a massive decline of the core iPhone business will give the company a much-needed roadmap for the future. The hopes are so high that Apple is just about $45 million away from becoming a trillion-dollar company. However, many wise analysts believe that Apple stock should be sold. On Wednesday, HSBC gave a “Reduce” rating to Apple Inc. (NASDAQ: AAPL) stock, citing weaknesses in the company’s recently-revealed first-party services. The bank’s analyst Erwan Rambourg said in his note that the services will take a lot of time to become effective for Apple’s bottom line.
“We do not expect these services to move the needle significantly,” Rambourg said.
The services mentioned by HSBC include Apple TV+ and Apple Arcade. These services were revealed by Apple in a major event last month. But the problem for Apple is that these services domains are already taken over by behemoths like Google and Netflix. Rambourg said that Apple has come “too late to the game.” HSBC set a $180 price target for Apple stock.
Apple Arcade and other new services don’t yet have a launch date or pricing details. On the other hand, Google recently played a masterstroke by launching Google Stadia, which is expected to revolutionize the future of gaming. Using Stadia, people will be able to stream and play games from any device, while offloading the graphics processing to off-site hardware. This will help millions of people to play online games without having to buy costly machines or GPUs. It is interesting to note that Apple Inc. (NASDAQ: AAPL) Arcade is not Cloud-based. This closed platform will not be able to stand against Google Stadia.
Colin Gillis of Chatham Road Partners recently said that Apple’s new video services will not be a killer for Netflix. The firm noted that even though Apple Music has 56 million subscribers, the service accounts for only 10-15% of the total services revenue.
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The author does not have an investment in stock discussed in this article.