Goldman Sachs Predicts Apple Stock Drop 26%
Goldman Sachs analysts changed the target price for Apple shares, dropping it in the forecast by 26%, from $187 to $165. The bank explained this by the accounting method that the company intends to use for revenue from the Apple TV + video service. Goldman Sachs believes that in its reporting Apple will reflect the free subscription as a discount of $60 for a package of the device and services. If a customer buys an iPhone 11 Pro for $1 thousand (in round figures from $999) and receives a free subscription to TV +, Apple will report this as a purchase of a device and service for $1060, Hall said. The $60 generated due to the subscription is equal to 5.7% of the total package price. Representatives of the bank claim that this discount will be taken into account both for the device and for the service. As a result, instead of $1 thousand, the average cost of the iPhone 11 Pro in the report will be closer to $943.4. This leads not only to a decrease in the average cost of the device but also to a drop in profit. Although this method may be convenient for the company itself, it will affect the average selling price of devices and lead to a high level of share sales in 2020. Apple does not believe that the introduction of Apple TV +, including the accounting for services, will have a significant impact on financial results.