Apple’s shares inched higher on Monday after losing about US$84-billion in market value in the previous session on the back of a US judge’s mixed decision in the iPhone maker’s fight with Fortnite game maker Epic Games.
Shares were up about 1% before the opening bell on Monday. They had closed down 3.3% on Friday.
The court issued a permanent injunction that would let app developers route players to alternative platforms to make payments, allowing them to avoid Apple’s 30% App Store fees.
Analysts said that while the ruling had the potential to eat into Apple’s services revenue, a big driver of growth in recent years, any hit was still unclear, would be spaced out in time and liable to be only a small fraction of overall income.
“In the end, I expect this to have at most a 2% headwind to overall revenue and 4% to earnings,” said Gene Munster, managing partner at tech-centric VC firm Loup Ventures.
“After the first year of these changes, App Store growth rates will return to normal. Bottom line: It’s at most a one-year headwind and does not change the big picture of where Apple is going over the next five years.”
Wedbush analysts also estimated that in a worst-case scenario, Apple would lose roughly 3% of total revenues and would be closer to about a 1% revenue and profit headwind over the next few years, given a vast majority of consumers will continue to use the App Store for in-app purchases.
On Sunday, Epic said in a legal filing that it plans to appeal a ruling in the antitrust case. — Reported by Nivedita Balu and Tanvi Mehta, (c) 2021 Reuters