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Last Thursday was an important day for us. Apple (NASDAQ:AAPL) We have some in stock, but not in a good way.
As reported by Bloomberg and others, the US Department of Justice joined forces with 16 state attorneys general to file antitrust charges against Apple on Thursday. Apple investors immediately panicked and sold off 4% of their stake in the iPhone maker, wiping out about $113 billion in market value.
Broadly speaking, the Justice Department accuses Apple of violating Section 2 of the Sherman Antitrust Act, which prohibits activities that restrict interstate commerce or competition and give Apple a monopoly. The department’s anger appears to be focused on Apple’s App Store and its policy of charging a 30% fee on apps and in-app purchases downloaded through the App Store. The Justice Department calls this anti-competitive, arguing that Apple is further stifling competition by entering into agreements to curb cloud streaming apps that seek to reduce a company’s reliance on the App Store for sales. There is.
The Justice Department is also outraged by the way Apple designs its products and software, which makes it difficult for other companies’ products and software to integrate with Apple. As the department argues, this undermines the quality of third-party apps used on Apple devices, even as it raises privacy and security concerns for users of non-Apple devices. is.
Wedbush five-star analyst Daniel Ives scrambled to understand what’s going on and what it means for Apple stock investors.
“While the potential outcome and legal settlement of this case is not yet clear, we ultimately believe it will take many years to resolve, much like Microsoft did in the ’90s. “Typically, the way this case plays out is that barking is worse than biting,” Ives opined.
Ives said the most likely scenario is that Apple settles the Justice Department lawsuit, pays a “significant” fine, and makes at least some changes to allow competitors’ software to integrate with Apple’s. The idea is to add .
“This incident will not be resolved in the short term, and Cupertino will come under further scrutiny both on the Belt and Road and in Brussels, adding headline risk to the Apple story. Overall, the most likely “We believe the high outcome is that this litigation drags on for years and that Apple ultimately has to make some small changes,” Ives summarized.
Ives maintains an outperform (or buy) rating on Apple stock for now, while his $250 price target suggests up to 45% upside from current levels. (Click here to see Ives’ track record)
Looking at the breakdown of the consensus, optimists are fighting off skeptics. The consensus rating for Apple stock is Moderate Buy, based on 17 buy recommendations, 9 holds, and 1 sell. Given the average price target of $203.87, we expect the stock to trade at ~18% premium in a year’s time. (look AAPL stock price prediction)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. Content is for informational purposes only. It is very important to perform your own analysis before making any investment.
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