• Brett Schafer

Apple Card is Coming Out Hot

This morning we had the banks kick-off the third-quarter earnings season. On the Goldman Sach’s call, CEO David Solomon talked about their consumer products like Marcus and the Apple Card. Without giving any statistics (I’m hoping Apple gives some later this month), Solomon had this to say about the new Apple Product:

“We believe [Apple Card] is the most successful credit card launch ever”

To clear up any confusion, Apple partnered with Goldman Sach’s to launch the card, which is why the CEO is speaking about it on the earnings call.

If the above statement is true (or at least, not a huge exaggeration), it looks like Apple has another hit product on its hands. I have no idea how much meaningful revenue this will bring in for them, and there’s no way it will be as close to as much as the iPhone or Watch. But I do know this: Apple has built a compelling offering of services for its users that blows any competition out of the water. I believe these services will help Apple get back to growing its revenue. Not just on the software side, but with its hardware products.

Services Will Propel Hardware Sales

A lot of people look at Apple’s new software or “Services” offerings in a vacuum. Apple Music, TV+, Card, Cloud, Care, Arcade, News, and Pay won’t bring in meaningful profits on their own. At least, not for the next five years. But they can get more people to buy the products where Apple actually makes money (i.e. iPads, iPhones, and wearables). That is why they are investing so much money into these seemingly disconnected products.

If you told me a company was going to invest $6 billion to try and compete directly with Netflix, Amazon, HBO, and Disney in streaming, I’d likely say that it would be a terrible waste of money. But if by investing that money that same company got a million more people to buy $1000 phones, I might think otherwise.

*Note: Another thing Apple may (or should) try is bundling their software offerings, or even having people “subscribe” to their annual hardware updates for $50 – $100 a month. Recurring revenue = higher earnings multiple = more value to shareholders.

Disclosure: The author is not a financial advisor, and may have an interest in the companies discussed.


#Stocks #Apple #CreditCards #AppleCard #Investing #GoldmanSachs #Services #Finance

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