Goldman Sachs predicts an Apple collapse after launches

• Apple introduced several products and services on September 10 in California

• A few days later, the Goldman Sachs rating agency analyzed the company's finances and warned of its immediate future.

• A series of discounts and free offers for Apple TV would cause the fall in forecasts

On September 10, Apple materialized in Cupertino the launch of its new products and services, especially the renewed smartphone models, its classics iPhone.

With the sales of the iPhone 11 range, Apple will seek to improve its profits until the end of the year with the idea of ​​avoiding what seems impossible: that Huawei surpass it in quantity of units sold and leave the smartphones of the company of Tim Cook in third place on the list led by Samsung.

Among the news announced on Tuesday, it was announced that streaming platform that the company prepares for several months will be officially launched on November 1 and that from the beginning it will have four original series.

Cook also said that The subscription price for Apple TV + will be US $ 4.99 per month.

The value, just over a third of the US $ 13 that Netflix costs on average in the United States, is understood as an aggressive marketing strategy to conquer subscribers, especially when almost at the same time, on November 12, Disney + will see the light at US $ 7 per month.

Down

In this context, this Friday it was known that Goldman Sachs significantly cut its target price (price target) for Apple, anticipating a decline in 26% in shares.

The risk rating agency speaks in its report of a “Significant negative impact” in earnings for the discount system that the iPhone manufacturer plans to launch for the first tests of Apple TV +.

Indeed, as part of the sales strategy, Apple plans to offer streaming with a strong discount (even free) for one-year trial subscriptions, combining the service in the same package with hardware acquisitions. This, for Goldman analyst Rod Hall, It will be a problem.

For the specialist, the combined package that “Transfers the income from the hardware to the services, Although it may seem convenient to add cash to Apple services, it will be just as inconvenient for hardware numbers and for margins in the coming quarters, which are always high sales for the company. ”

After the report was known, Apple shares fell 2% at Friday's opening since its close of the previous day to US $ 223 per share.

Likewise, Goldman reduced its target price to 12 months from Apple from US $ 187 to US $ 165 and maintained its neutral rating for the shares.

Hall's new target price is the lowest of Wall Street banks and the fifth lowest of all analysts covering Apple, according to TipRanks.com.

Goldman is not accusing Apple of "inadequate accounting," but believes that profit margins for its hardware sales will suffer as a result of this free AppleTV + trial. Understand that investors will react negatively.

Hall said he expects revenues from the free trial version of AppleTV + to add 25% to the company's gross margin, but will be offset by lower income from product sales and will result “A negative impact calculated at 16%” for the first fiscal quarter of 2020.

“We understand that this is an offer that will only last one year. In the event that it lasts longer, our forecasts for next year would probably also have to be adjusted, ”the analyst added.

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