Why Apple Stock is Few Today

What happened

Actions of Apple (NASDAQ: AAPL) the stock slipped 2.8% at 3:30 p.m. EDT on Monday.

Granted, the entire stock market has had a pretty bad day. The S&P 500 is down 1.5%, and growth stocks in particular are taking it to the chin. But Apple’s particular decline appears to be directly attributable to an article in The Wall Street Journal during the weekend.

Image source: Getty Images.

So what

Calling Apple “the most prominent player in the game,” the Newspaper went on to explain how Apple’s App Store has racked up jaw-dropping operating profit margins on in-game purchases facilitated by its software. In 2019 alone, the newspaper reports, Apple posted an operating profit of $ 8.5 billion from game sales, more than what was earned by Microsoft (NASDAQ: MSFT), Nintendo (OTC: NTDOY), Activision Blizzard (NASDAQ: ATVI), and Sony (NYSE: SONY) – combined.

With operating profit margins of almost 29% (according to data from S&P Global Market Intelligence), Apple is already known to be a gargantuan profit-collector, but the money it makes in games is a huge one. any other order. According to sources cited by the Newspaper, game revenues collected through the App Store generate operating margins of up to 75%!

Now what

Now all of the above sounds like really good news for Apple – hardly the point of the stock drops. But the Newspaper seems to be of the opinion that as the profit margins of Apple’s App Store become more widely known, they could serve as ammunition for opponents of Apple in a litigation seeking to sell through the ‘App Store – or at least as pressure points to get Apple to lower its 30% fee on App Store sales.

The newspaper further points out that because “just 6% of App Store game customers in 2017 accounted for 88% of all store game billings for the year … [and] nearly 31% of [gaming revenues come from] in China when 26% were in the United States, “Apple’s gaming revenues (and profits) could be at risk in their two most important markets.

In China, government regulators are cracking down on children’s games and trying to limit online video games to no more than three hours per week. Combine that now with US game companies pointing out – and defying – the seemingly too large profits Apple is making from the work of game companies, and Apple’s gaming profits may soon approach a pivotal moment.