Apple Faces Modest Earnings Hit After Court Ruling But Analyst Expects Match, Bumble, Spotify Set To Gain

Core Viewpoint - Apple Inc faces a legal setback regarding its App Store policies, but the impact on its stock price is expected to be less severe than previously anticipated by investors [1]. Group 1: Legal Developments - The U.S. Court of Appeals for the Ninth Circuit denied Apple's emergency application to halt changes to its App Store resulting from a legal dispute with Epic Games [1]. - Judge Gonzalez's ruling requires Apple to allow link-out payments for applications at a 0% commission, down from the previous 27% [2]. Group 2: Financial Impact - The implementation of the zero-commission link-outs is projected to moderate Services revenue growth by up to 200 basis points, leading to an EPS headwind of 2%-3% [2]. - Prior to the ruling, the U.S. App Store was estimated to contribute $11.3 billion in fiscal 2025, approximately 3% of Apple's aggregate revenues [3]. Group 3: Market Reactions and Future Outlook - Analysts expect that the appeal process against Gonzalez's order could take two years or more, especially if it reaches the Supreme Court [3]. - The court's decision is significant for app developers, many of whom have already updated their apps to accept credit card payments, potentially leading to an annual margin uplift [4]. Group 4: Industry Implications - Companies like Roblox Corp, which generates 30% of its revenue from the App Store, may see margin uplifts depending on how much savings are passed on to developers [5]. - Other companies, including Spotify and Amazon, may benefit from increased user acquisition as they previously avoided subscriptions due to Apple fees [5][6]. Group 5: Stock Performance - Following the news, Apple stock rose by 0.29% to $203.40 [6].