Apple’s Apple Card partner thinks there is “significant downside risk” to the companies investors in 2022.
As reported by AppleInsider, Goldman Sachs analyst Rod Hall believes that a slowdown in the growth of the App Store as well as the expiration of free trials for Apple TV+ will cause major impact on the company’s fiscal performance.
According to Hall, a bottom-up model of Apple Services suggests that there is “significant downside risk to  consensus for Services revenue.” He attributes that mostly to a slowdown in App Store growth post-coronavirus.
Hall says that there could be a 2% year-over-year decline per user in 2021 as pandemic-era restrictions ease and activities move out of the home. That decline would result in growth of 3% year-over-year, down from 28% in 2020. The analyst adds that the Apple TV+ free trial continues to redistribute product revenue into Services. If Apple were to end its extended trial, it would likely result in a 4% negative impact to Goldman Sachs’ 2022 Services forecast, he added.
The analyst believes that Apple will actually extend the free trial of Apple TV+ in order to continue its push into the new service.
Goldman Sachs estimates that TAC growth for iOS materially slowed to 11% year-over-year in 2020, down from 25% in 2019. Going forward, Hall forecasts that TAC revenue could recover in 2021 to $15 billion and 29% year-over-year growth. Mostly, this is attributed to the fact that Google search revenue plummeted during the global health crisis.
There are a few risks to TACs, however. Hall says that a looming Justice Department case, which includes scrutiny of the payments made by Google to Apple, could impact the search giant’s ability to pay Apple to be the default iOS web browser. App Tracking Transparency could also affect Google TAC payments.
Despite the threats that exist to Apple’s business, Hall believes that the new Apple One bundles will help protect and eventually grow the company’s services.
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