Jefferies warns: Antitrust case may cause Apple to lose one-third of Google's revenue share
Jefferies warned that if the US Department of Justice wins the case, Apple may lose one-third of its Google revenue sharing revenue, with an estimated 8% decline in discounted cash flow for the 2028 fiscal year. Analyst Edison Lee stated that a settlement may take 3 to 8 years, and this loss is limited to the US only. Despite this risk, the sales of iPhone 16 and the launch of Apple Intelligence are seen as more important factors. Apple's stock price fell by 0.89% on Wednesday to $231.78, with a year-to-date cumulative increase of 21%
According to the VETIM Finance APP, the transactions between Google (GOOG.US, GOOGL.US) and Apple (AAPL.US) and other smartphone manufacturers are at the core of the antitrust lawsuit filed by the US Department of Justice against the search giant. Investment firm JF Royalty stated that if the US Department of Justice ultimately wins the series of appeals, Apple may lose a significant amount of revenue.
Analyst Edison Lee from JF Royalty stated: "Our antitrust experts in the US Internet team believe that reaching a settlement may take 3 to 8 years. We expect that if Apple loses 1/3 of its revenue from Google in the 2028 fiscal year (limited to the US only), our discounted cash flow (DCF) will decrease by about 8%."
Lee mentioned that this decline would only occur in the US and assumes that there is no offset in the revenue sharing agreement between Apple and Google or other search engine companies, which is the most pessimistic outcome. However, he warned that if the US Department of Justice wins, other countries may take notice. The analyst maintained a "hold" rating for Apple.
Lee added that despite this unresolved issue, considering that the iPhone accounts for about half of Apple's annual revenue, the sales of the iPhone 16 and the launch of Apple Intelligence are seen as more important factors in the short term.
As of the close of trading on Wednesday, Apple fell by 0.89% to $231.78. The stock has risen by 21% year-to-date