Apple's Stock Rises Amid Major App Store Overhaul and India Expansion

Apple Inc. (AAPL) saw its stock price rise by 1.03% last week, contributing to a 0.35% increase over the past week and an impressive 18.28% year-to-date. The company's market capitalization now stands at $3.449 trillion. At the time of writing, Apple's stock was trading at $227.91, up by 1.51%.

Recently, insider Mark Gurman revealed that Apple is planning a significant overhaul of its App Store operations. Long-time vice president Matt Fischer, who has overseen the App Store for 14 years, will be departing this October. Consequently, the App Store team will be divided into two separate entities, each handling Apple's proprietary App Store and third-party app distribution channels respectively. Two experienced senior executives from within the team will lead these new departments.

The UK Competition and Markets Authority (CMA) has concluded its latest investigations into the Google Play Store and Apple's App Store. Earlier in June, the UK antitrust regulator extended the preliminary review period for both Apple and Google's practices related to in-app purchases. Developers have been required to use Google Play or Apple’s billing systems for in-app purchases, which the CMA has criticized for limiting developer payment solutions. However, with the recent enactment of the Digital Markets, Competition, and Consumers Bill (DMCCA) in May, the CMA has decided to evaluate the regulations under the new digital market framework.

The CMA stated that if Apple or Google is found to possess "strategic market status" in any digital activities, the authority could apply a more comprehensive range of interventions under its new powers to ensure fair competition.

Additionally, Apple has updated its App Store fee structure for EU developers to comply with the EU Digital Markets Act (DMA). These changes address how developers can link to other payment methods and present alternative options to users.

Sources indicate that Apple will produce its high-end iPhone Pro and Pro Max models in India for the first time this year. Key partner Foxconn is set to commence assembly of the new devices just weeks after their global launch this fall. Training for thousands of workers at Foxconn’s Tamil Nadu factory is already underway to produce the iPhone 16 Pro and Pro Max models.

Under Prime Minister Modi’s fiscal incentives aimed at drawing high-end manufacturing to India, Apple’s move to produce its entire iPhone series locally marks a significant milestone. Although the majority of iPhones are still produced in China, this diversification strategy is aimed at mitigating geopolitical risks. In the fiscal year ending March 2024, Apple will have assembled iPhones worth $14 billion in India, accounting for 14% of its global output.

Following the launch, Apple will start selling the new standard iPhone 16 models that are made in India. Other partners like Luxshare ICT and Tata Group may also soon begin producing Pro models. Given the higher complexity of these premium devices, they require specialized production lines.

As the world's most populous nation, India is becoming an increasingly significant market for Apple. CEO Tim Cook opened Apple’s first retail stores in India last year, with annual sales nearing $8 billion. By the end of the year, Indian-made iPhones are expected to meet the local demand, potentially leading to up to a 10% price reduction due to the absence of import tariffs, although high local taxes on imported parts will still keep prices elevated.

Despite this, the majority of India-produced Pro and Pro Max units will be shipped to Europe, the Middle East, and the U.S., where demand for higher-end models is stronger. The new iPhone 16 series will feature upgraded cameras, processors, and screens, aiming to offset recent disappointing sales performance.

Sales in India have grown by 33% over the past 12 months to nearly $8 billion, which is a positive indicator for Apple as it faces stiff competition in China. Analysts predict that by 2030, Apple’s sales in India could reach $33 billion, driven by a burgeoning middle class and increased use of installment payment plans.

Research division MoffettNathanson has initiated coverage of Apple with a neutral rating and a price target of $211. Analysts compare the AI-driven iPhone upgrade cycle to the start of the 5G upgrade cycle, highlighting regulatory challenges outside the U.S. and geopolitical factors as potential hurdles. Regulatory risks, including the U.S. antitrust lawsuit against Google, remain a concern as Google’s payments to Apple for being the default search engine are under scrutiny.

Analysts also noted that, despite the high valuation of Apple’s stock and optimistic growth assumptions, Seeking Alpha’s quant rating system and author consensus rate Apple as "hold". Meanwhile, Wall Street analysts maintain a more bullish "buy" stance.