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Apple Continues its Push into Financial Services Space

Apple (AAPL) has acquired UK-based credit scoring startup Credit Kudos, according to a Bloomberg report.

Credit Kudos’ credit scoring service works for both businesses and consumers. It enables businesses to assess loan applicants by looking into their transactions and other banking data, and lets potential borrowers check their credit worthiness.

Apple Declines to Reveal Its Plans for Credit Kudos 

Credit Kudos raised about $6.5 million in a 2020 funding round that drew investors such as AlbionVC, Plug and Play Ventures, and TriplePoint Capital. The Apple deal valued the startup at about $150 million, according to the Block.

Without confirming or denying the Credit Kudos acquisition, an Apple spokesperson told Bloomberg that the company buys technology startups from time to time, but it does not discuss its intentions. 

Apple’s Big Push into Financial Services 

The purchase marks the iPhone-maker’s continuing push into the financial services space. It already offers credit cards under the Apple Card brand, and lets some customers pay for device purchases in installments. Additionally, its Apple Pay service lets users pay for purchases from various merchants online and in-store. 

Apple also plans to introduce a buy-now-pay-later (BNPL) option for Apple Pay. Notably, the BNPL market is forecast to grow to $3.98 trillion by 2030 from about $91 billion in 2020.

Apple (AAPL) is also working on a new service that will convert iPhones into payment terminals to rival Square (SQ), the market leader in this space. The company has been working on the feature since it paid $100 million for Mobeewave in 2020.

The financial services that Apple offers come under its Services business. Services revenue rose to $19.5 billion in fiscal Q1 2022 ended December 25, from $15.8 billion for the same period the previous year.

Wall Street’s Take

On March 21, Bernstein analyst Toni Sacconaghi reiterated a Hold rating on Apple with a price target of $170, which indicates 0.1% downside potential. Although the analyst believes AAPL’s risk-reward is balanced, he thinks Apple can drive up to $10 billion in incremental revenue by leveraging its advantages in the digital advertising market. 

Consensus among analysts is a Strong Buy based on 23 Buys and five Holds. The average Apple price target stands at $193.36 and implies upside potential of 13.6% to current levels. Shares have gained 43% over the past year.

Stock Investors

TipRanks’ Stock Investors tool shows that investor sentiment is currently Very Positive on Apple, with 1.4% of portfolios tracked by TipRanks increasing their exposure to AAPL stock over the past 30 days.

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