Large U.S. corporations, including Microsoft (MSFT), Apple (AAPL), Alphabet (GOOGL), Amazon (AMZN), Facebook (FB) (now Meta), and Tesla (TSLA), have reported their quarterly earnings. While Microsoft, Google, and Tesla zoomed past estimates, Apple, Meta, and Amazon disappointed.
Though these companies may not have solid quarterly performance in common, they are under a lot of scrutiny due to their global operations and large scale. Further, geopolitical events, complex international laws, and economic cycles directly hurt their brand image, financials, and operating conditions.
Thus, it is prudent to keep an eye on the evolving risk factors of these corporations, as ascertaining risks ahead of investing enhances the odds of winning in the market.
Using the TipRanks’ new and dynamic Risk Factors tool and looking at the risk distribution profile of these companies, it is clear that Apple is the only company, among the above-mentioned companies, that has added two new risks post its recent quarterly earnings.
Highlighting the increased scrutiny on the technology sector, Apple, in a recent SEC filing, stated that it is subject to “intense media, political and regulatory scrutiny, which exposes the Company to increasing regulation, government investigations, legal actions and penalties.” Further, this may harm its brand reputation.
Additionally, under its Sales & Marketing sub-category, Apple stated that its failure to offer appealing digital content to its customers could negatively impact its financial and operating performances.
It is worth noting that Apple offers a variety of digital content through its app store and subscription-based services. Further, it launched a personalized fitness service, including Apple Fitness.
During the Q4 conference call, Apple’s CFO Luca Maestri stated that the company is seeing “increased customer engagement” for its services. Further, the paid accounts on its digital content stores marked double-digit growth and reached an all-time high during Q4 in each geographic segment.
Noting the strong growth in its paid subscriptions, Maestri stated that Apple now has over “745 million paid subscriptions across the services on our platform,” up 160 million year-over-year.
Overall, Apple’s risk distribution profile indicates that factors including its Ability to Sell, Production, and Macro & Political place it in a higher risk zone. All these risk factors are well above the sector benchmark.
However, its Legal & Regulatory, Tech & Innovation, and Finance & Corporate risks are well below the sector benchmark.
Meanwhile, on TipRanks, Apple stock has a rating consensus of Strong Buy, based on 19 Buys and 6 Holds. Additionally, Apple scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that it will likely outperform the market.
The average Apple price target of $168.91 implies 12.8% upside potential to current levels.
Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.
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