When Apple rolled out iOS 14.5 in the interest of “protecting users’ privacy”, many were able to see through the charade and knew the tech company was preparing to take advertising into its own hands. And, these suspicions have all but been confirmed with the latest news that Apple is hiring a senior manager for a Demand Side Platform (DSP) in its ad platforms business. The job description entails “driving the design of the most privacy-forward, sophisticated demand side platform possible”. This will, in turn, enable Apple to serve ads within the iOS ecosystem with the highest level of precision and efficiency, not found elsewhere. The implications are grand for the mobile advertising space, where Apple’s app store generates more than double the revenue than the Google Play store despite having fewer active devices when compared to Android.
Small, mid, and large-scale businesses alike all felt the effects of Apple making it harder to grow using their ecosystem. In fact, other tech giants like Meta and Google even took hits as companies stopped advertising with them thanks to IOS 14.5. Meta, specifically, reported an estimated loss in annual revenue of over $10B from these data privacy changes.
Fortunately, the advertising landscape is about to change – hopefully for the better – for both advertisers and users alike. If Apple’s taking on the time and capital investment to build their own DSP, you can trust that it’s going to be revolutionary. Advertisers will enjoy the automation of their advertising campaigns – and better ad delivery – while users can trust that their data is safe and secure. By building this DSP, Apple has full control of how and where data is used – and can prevent leakage.
What Does This Mean For Investors?
Apple is looking to stake its claim as the #1 advertising platform for businesses. The company’s ad platform brought in just shy of $20 billion in the 3rd quarter – making up almost 25% of total revenue. Those who already have a position in Apple will benefit from portfolio gains from this strategic decision. The only question is, when will the new DSP roll out – and how quickly will the value of Apple increase as a result?
While we can only continue to wait and watch the news, one thing is certain: if you wait for the DSP to roll out to enter your position – you’ll be too late. Investors will benefit from entering their position in Apple before more news comes out, as we’re already seeing the stock price beginning to move as a result of this early preliminary news. Our stock forecasting tool is currently rating the company a “buy”. Here is why:
- Above average upside potential: with RV (relative value) of 1.10, Apple is currently showing strong potential for long-term price appreciation. It’s true that the stock is overvalued – with a current price of $164 and a calculated value of just $106. However, the VectorVest analysis computes a projected price appreciation 3-years out. If you’re looking for a good long-term play, Apple qualifies according to the VectorVest system.
- Timing is very good: If you’ve been waiting to enter a position in Apple, our system is showing that the time is now with an RT (relative timing) of 1.39. We calculate our proprietary VST (value, safety, timing) ratings on a scale of 0.00-2.00 – and thus, this RT rating is incredible. This has been calculated based on the direction, magnitude, and dynamics of the stock’s price movements. Entering your position now will set you up for success as the rollout of this new DSP approaches. If you wait too long you’ll be forced to enter your position at a higher price – leaving you less room for margin.
The upside potential and timing of Apple have earned it a “Buy” rating in VectorVest. Other factors – including RS (relative safety) of 1.12 – lead to a combined VST (value, safety, timing) rating of 1.23. These factors make it one of our top-rated stocks. As more news of the DSP and its positive implications for the company roll out, the stock’s value will likely rise even higher.
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VectorVest advocates buying safe, undervalued stocks, rising in price. As for Apple, it is safe, it shows great long-term upside potential, and the timing is very good.
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