When Apple (NASDAQ:AAPL) announced an iPhone SE, the mid-range pricing and high-end specifications gave customers a good upgrade option. With unemployment rates temporarily soaring to levels not seen in a decade, consumers are sensitive to product pricing. The SE should help Apple gain market share.
Apple’s budget iPhone SE uses the 4.7-inch screen and body of the iPhone 8. But it also has the same processor used in the flagship iPhone 11. Instead of face-detection unlocking, it uses the classic touch ID button. Ahead of the launch, Apple shares erased more than half of its losses.
Shares are trading at its 50-day moving average of $283. The earnings report this week should give investors more insight into where the stock will head to next. At 22.35 times earnings, Apple stock is still cheaper than Microsoft (NASDAQ:MSFT), which has a P/E of 32 times.
Apple will likely continue growing its user base as those who delayed an upgrade buy the SE device. And instead of switching to an Android, the user loyalty on the iOS platform will give services revenue a lift.
Your Takeaway
Apple’s Apple TV is the only unknown in the near-term. The company will bleed money as it grows the service and incurs heavy costs. This is offset by higher warranty and services fees, increasing App download and purchases, and subscription to the Arcade service.