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New research from investment bank Morgan Stanley says global App Store Growth was offset by declining sales in China and as a result lowered the target price for Apple shares.
Following on from previous Morgan Stanley research that said Chinese users are: buy less apps, the company says the decline is significant. With the exception of China, Apple’s top ten markets all saw gains — some, including the US, grew by 9% or more year-on-year.
†[We] darling App Store [overall] net sales growth slowed to +2.5% Y/Y in the month of June,” Morgan Stanley said in a note to investors seen by AppleInsider“a 1.5 point slowdown from 4% year-on-year growth in May.”
Morgan Stanley estimates that “App Store net revenue growth in China in the month of June is down 6% Y/Y [2022]That compares to 3% year-on-year growth in May 2022.
Gaming was reportedly “the main culprit” as it saw a 3.4% year-over-year decline in June, after a 0.8% drop in May. All other App Store categories combined showed a growth of 11% in June, about the same as in May.
The decline may follow China’s restriction on licensing to: gaming companies† Also, recent restrictions have placed restrictions on: childhood playing games.
Morgan Stanley has therefore revised its estimate of Apple’s June quarter App Store net revenue. The bank now estimates revenues at $6.5 billion, which is about $67 million lower than previous forecasts.
Katy Huberty of Morgan Stanley previously reduced Its price target for Apple from $210 to $195 due to the tough economic conditions in the June quarter, but said Apple still remains a top pick for 2022. In this new note, the bank lowers its price target even further to $185.
Apple announces its next quarterly results on July 28†