Why Apple Shares Fell by 1.4% on Monday Despite New Services Launch

At the time of writing this post, Apple shares are surging. However, the shares experienced a fall of 1.4% on Monday. The fall is significant because it occurred after the much-hyped new products launch by Apple. The new services included the TV service, Apple Card and a news app to name a few.

The primary reason why the share fell despite the potential increase of revenues especially the potential rise of recurring revenues follows: The announcement lacked details on pricing. Unless the pricing details are known, analysts wouldn’t be able to precisely estimate the projected revenues from the services. The lacking of pricing details has been pointed out as the reason the Monday fall by many media reports.

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Tesla Shares: 2 Downgrades by 2 Analysts Between Friday & Monday

A downgrade from a well-known analyst is not good for a stock. The more the credibility of the analyst the more impact the call will have on the investor sentiment as well as the share prices. Tesla has witnessed two back to back downgrades between Friday and Monday.

The first downgrade was by Cowen which slashed the price target to $180 from $200. The primary reason was a change in the predicted number of deliveries of Models 3, S and X. The analyst forecasts the deliveries of Model 3 to be around 47,500 instead of the earlier estimate of 55000. Similarly, the forecast for Model S and X has been lowered from 21500 18000.

The second downgrade was by RBC Capital. The analyst is now forecasting 52,500 Model 3 deliveries instead of the earlier estimate of 57,000. Also, the analyst has lowered the expected revenues in the coming quarters. The price target has been slashed from $245 to $210.

Netflix Shares Win Round One Vs Apple on Monday Gaining 2%

On Monday (25th March 2019), Apple announced a host of new services including TV streaming. Initially, it was thought that there could be some kind of integration between Apple streaming and Netflix. Later when Netflix announced there is going to be no integration with the new streaming service of Apple (but that the Netflix app will available on iTunes store) one thing was clear: Apple’s new streaming service is going to compete with Netflix.

On Monday after the announcement, many analysts weren’t convinced of the revenue potential due to the lack of critical details including that of the pricing. Therefore there weren’t many vocal bearish signals on Apple. Probably this could have led to the surge of Netflix shares on Monday. The shares opened at $359 and closed at $366.23. The gain was 2%. On the other hand, Apple shares suffered a one-day loss of about 1.4%. Shares which begun the day at $191.51 had closed at $188.74.

If the Apple’s streaming service had convinced the wall street experts and analysts the story would have been radically different. With Apple’s entry into the streaming, the competition against Netflix has officially begun. These are just initial days to take a call. However, based on share prices impact alone, Netflix has won the round one of the streaming-services competition.