This Announcement Could Send AAPL Stock Skyrocketing
Tech conglomerate Apple Inc. (NASDAQ:AAPL) has had a great year of earnings and so far, AAPL stock has beaten the S&P 500 index in its year-to-date run. Everything looks great; that is, until you see this week’s unwarranted slump in AAPL stock, despite having released one good news report after the other. The latest announcement out of the company’s Cupertino HQ is yet another reason for AAPL stock investors to stay optimistic.
This Is a Big Deal for AAPL Stock
Apple is soon going to roll out its very own person-to-person (P2P) payment service, which will be an addition to the currently active Apple Pay service, which is more of a person-to-merchant (P2M) service. The P2P service competes with PayPal’s Venmo and Square Cash. However, Apple is not the first of its kind; Alphabet Inc. and Facebook, Inc. are already offering a similar service.
Apple users have already been using Apple Pay to purchase merchandise at various points of sale (POS) around the country, including drugstores and restaurants. However, the latest P2P service will allow users to transfer money digitally via their phones. The company is already in talks with the top U.S. financial institutions, including JPMorgan Chase & Co., Wells Fargo & Company, U.S. Bancorp, and Capital One Financial Corp., to get the ball rolling.
The idea is to create loyalty for the brand and attract users to its platform. Look at it this way: if you have a device that does everything for you from as simple as making calls to as complex as financial transactions, would you ever want to let go of it?
Also, in the “Internet of Things” (IoT) ecosystem, where users are connected to devices and devices are connected to other devices, many physical objects of daily use are being rendered redundant-in this case, it’s your wallet.
I admit that I’ve been repeatedly mentioning the IoT in my analyses, but why not? This phenomenon is taking the world by storm. It wouldn’t be wrong to say that Apple is on its way to take the biggest chunk of this ecosystem by creating the most high-end and widely recognized platform on iOS.
The concept of the digital wallet was initially rebuffed by the average Joe, but what do you know? Silicon Valley never backs down from its wild sui-generis ideas. Generation X may continue to disregard the idea altogether, while Generation Y remains indifferent. But Generation Z is increasingly endorsing digitized mobile phone payments. Millennials are the biggest users of the service and Apple doesn’t want to miss the boat while others are making a run for it.
It remains unclear how Apple will make money on this particular service. It would make more sense if Apple chooses not to, since P2P leader Venmo offers the same service for free. The service could work more like an add-on to Apple Pay, from which Apple draws a cut on every transaction. The service will help induce the adoption of Apple Pay, taking some share from traditional hand-to-hand cash and check payments. Theoretically, new P2P users, once having developed some faith in the system, will eventually move to using the merchant payment service of Apple Pay.
Think it seems like a long shot? Let’s not forget that it’s the drops that make the ocean; consider this to be another small drop in Apple’s ocean.
Bottom Line on AAPL Stock
Apple stock has seen a reversal from its August-end lows and has been making higher lows and higher highs ever since. I see a weak uptrend here and this week’s rout in AAPL stock seems to be short-lived.
Apple is the most profitable company in the U.S. and its iOS ecosystem currently holds a good 14% of the world market share. There’s huge growth potential for the company in the coming years, as it continues to diversify its business beyond computers and mobile phones to financial services and auto-making.
Rest assured, I see good times ahead for AAPL stock.