On Tuesday, Evercore ISI highlighted the potential for significant growth in Apple (NASDAQ:AAPL)'s payment business, emphasizing the underappreciation of this segment among investors.
The optimism stems from positive insights shared by a former Apple payments product expert and reflects the tech giant's efforts to expand Apple Pay and other payment services.
Apple Pay remains at the forefront of the company's strategy, with initiatives aimed at boosting its adoption. These include collaborations to substitute employee badges and transit cards with Apple Pay functionality. Moreover, Apple has been focusing on enabling micro-merchants to use their iPhones as point-of-sale devices through tap-to-pay technology.
The company's partnership with Stripe and other businesses aims to offer a more comprehensive payment service. There is speculation that Apple may eventually bring the entire payment processing stack in-house, enhancing its control over the payment ecosystem.
Analysts also pointed out the possibility of Apple extending its payment services to the B2B sector, leveraging its expanding enterprise presence. This could mark a strategic shift from its current B2C focus.
In the e-commerce realm, Apple Pay lags behind PayPal (NASDAQ:PYPL), which is accepted by a majority of online retailers. However, Apple's introduction of a Buy Now, Pay Later service could narrow this acceptance gap, making Apple Pay a more attractive option for both consumers and retailers.
Evercore ISI concluded that if Apple succeeds in closing the acceptance gap with PayPal, the convenience of Apple Pay could lead to its preference among the billion-plus iPhone users, who would benefit from a more streamlined online payment experience.
InvestingPro Insights
Evercore ISI's upbeat outlook on Apple's payment business is mirrored by the company's substantial market presence and financial metrics. With a colossal market capitalization of $2.93 trillion, Apple stands as a titan in the industry. The company's dedication to enhancing Apple Pay and other payment services could be a strategic move to leverage its solid financial foundation, which includes a robust gross profit margin of 45.59% over the last twelve months as of Q2 2024.
One notable InvestingPro Tip for Apple is its consistent dividend growth, having raised its dividend for 12 consecutive years, with an 8.7% increase over the last twelve months as of Q2 2024. This commitment to returning value to shareholders could appeal to investors looking for stable income alongside potential growth in the payments sector. Additionally, Apple's stock has shown a strong return over the last month, with a 15.94% price total return, highlighting investor confidence.
For investors seeking to delve deeper into Apple's financial health and stock performance, InvestingPro offers additional insights. There are 18 more InvestingPro Tips available, providing a comprehensive analysis of the company's financial status and market position. Interested readers can unlock these insights and benefit from an exclusive offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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