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Investing.com - Apple (NASDAQ:AAPL) stock gained following Evercore ISI’s reiteration of an Outperform rating and $300 price target on the tech giant amid reports of a new payment agreement with Tencent. The stock, currently trading at $273.51, sits just 1% below its 52-week high of $277.32 and has delivered an impressive 28.7% return over the past six months. According to InvestingPro data, Apple currently appears overvalued based on its Fair Value assessment.
According to Bloomberg, Apple and Tencent have reached terms allowing Apple to process payments for purchases made in WeChat mini games and apps, with Apple taking a 15% commission instead of its traditional 30% App Store fee.
Despite the reduced commission rate, Evercore ISI estimates this arrangement could generate approximately $125-400 million in quarterly revenue for Apple, considering that social networking revenues, which include mini game and app revenues, totaled about $4.5 billion in the September quarter. For context, Apple reported total revenue of $416.16 billion in the last twelve months, with a solid 6.43% revenue growth rate.
The reported agreement coincides with Apple’s launch of its Mini Apps Partner Program, which will provide support to mini app developers at a reduced 15% fee for those meeting Apple’s criteria, including adoption of its Advanced Commerce API and In-App Purchase system.
Evercore ISI views the reported Tencent agreement as a net positive for Apple that should drive incremental revenue, while potentially addressing the long-term issue of developers bypassing Apple’s payment processing fees through mini app web-based programs. With a market capitalization of $4.04 trillion and an "Overall Good" financial health score from InvestingPro, Apple continues to demonstrate its ability to adapt its business model. InvestingPro offers 20+ additional insights on Apple, including its perfect Piotroski Score of 9, through its comprehensive Pro Research Report available for 1,400+ top US stocks.
In other recent news, Apple Inc. is seeing a strong performance in the Indian market, breaking into the top five smartphone brands by volume for the first time in the third quarter. The iPhone 17 series is showing stronger launch momentum than its predecessor, particularly popular in India and China. Meanwhile, Apple has delayed the release of the next iPhone Air model due to weaker-than-expected sales of the current version, with no clear timeline for the updated model’s launch.
In terms of product development, Apple is working on its first low-cost laptop, aimed at competing with Chromebooks and entry-level Windows PCs. This budget Mac, code-named J700, is expected to target students and casual users. On the automotive front, Tesla Inc. is reportedly testing the integration of Apple’s CarPlay system into its vehicles. In the realm of stock analysis, UBS has maintained its Neutral rating on Apple with a price target of $280, noting stable iPhone availability and wait times across key markets.
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