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🤔 Could Apple Get Into Advertising?

🤔 Could Apple Get Into Advertising?

Plus, a new competitor is entering the weight-loss drug race

July 12, 2024

Pencils down, it’s time for lunch. Here’s what you missed this morning:

🟩 | Market Snapshot: All three major indexes rose by roughly 1% this morning as the bull market broadened outside of tech, and the S&P 500 rebounded back above the 5,600 level.
🏦 | In focus: Today is a big day for America’s biggest banks. JPMorgan, Citigroup, and Wells Fargo reported quarterly earnings, and investors are digesting the information, looking for signs of weakness in the banking system.
🥵 | Noteworthy: The Labor Department reported this morning that the producer price index rose by 0.2% last month, slightly hotter than expected. PPI is now up 2.6% YoY.
🤔 | The Midday Trade: Could Apple Get Into Advertising? Scroll down for more.

Plus, today’s partner reveals the energy stock poised to take advantage of the “oil melt-up.” Click here to learn more.

TOGETHER WITH STREETLIGHT CONFIDENTIAL

Are You Ready for $200 Oil?

Some experts predict $200+ oil… and investors are scrambling to uncover the hidden upside.

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STREET STATS

Credit: Statista

MORNING MOVERS

Wells Fargo, Carvana, & AT&T

WFC: Shares of Wells Fargo tumbled after the bank reported $11.92 billion in net interest income, marking a 9% YoY decline (CNBC)

CVNA: Carvana’s stock surged after BTIG initiated coverage on the stock with a Buy rating and a $155 price target, indicating a 17% upside (MB)

T: AT&T saw its stock dip after news broke that nearly all of its customers’ call and text records were exposed in a massive data breach (CNN)

TSLA: Tesla’s stock rose despite UBS downgrading its shares to Sell from Neutral, believing that the stock has climbed too far and too fast (CNBC)

FAST: Industrial stock Fastenal saw shares rise after it posted Q2 revenue of $1.92 billion, which topped analyst estimates of $1.91 billion (SA)

TOP CALLS

BitDeer: B. Riley Securities Maintains Buy on Bitdeer Technologies, Raises Price Target to $14 (Trade It)

Fortune Brands: Loop Capital Maintains Hold on Fortune Brands, Lowers Price Target to $79 (Trade It)

Axcelis: Craig-Hallum Maintains Buy on Axcelis Technologies, Raises Price Target to $174 (Trade It)

Coeur Mining: BMO Capital Maintains Outperform on Coeur Mining, Raises Price Target to $7.5 (Trade It)

Argenx: Evercore ISI Group Maintains Outperform on Argenx, Raises Price Target to $533 (Trade It)

Victory Capital: B of A Securities Maintains Buy on Victory Capital Holdings, Lowers Price Target to $58 (Trade It)

THE MIDDAY TRADE

Could Apple Get Into Advertising?

Doubling Apple’s Revenue

According to Needham analyst Laura Martin, it is time for Apple (APPL) to take a headfirst dive into the world of advertising. She believes that doing so could double its revenue.

According to Martin, Apple does not currently have another revenue stream that could be bigger and more profitable. According to eMarketer, Apple’s global ad revenue will be approximately $9.3 billion in 2024. However, total worldwide ad spending is around $966 billion.

Taking a Page Out of Amazon’s Book

Global ad spending is currently growing around 8 times faster than Apple’s total revenue. Margins for ad sales are extremely high, usually between 70-80%. This would allow Apple to improve its margins without driving up prices for its marquee products.

Amazon was able to grow its advertising business from $3.7 billion in 2017 to $56 billion in 2024, and Martin sees no reason Apple can’t do the same.

The Stock

Martin currently holds a buy rating for Apple with a price target of $260 per share. On top of the ad business potential, she is bullish on the stock because of Apple’s $110 billion share buyback program.

Apple is up over 22% YTD and 21% over the past 12 months, outperforming the S&P 500. If it decides to take a page out of Amazon’s book, it could mean a huge jump in earnings for the already massive tech company. Investors who get in before that happens could see substantial growth.

TOGETHER WITH STREETLIGHT CONFIDENTIAL