The Apple stock price stands to get a nice push from the company's deviously brilliant Black Friday strategy.
Defying convention, Apple Inc. (Nasdaq: AAPL) opted to shun discounts on its products for Black Friday, Cyber Monday, or any holiday shopping day in between.
Apple retail chief Angela Ahrendts claimed Apple made the decision as a benefit to Apple retail store employees to spare them Black Friday's long hours and deal-hungry mobs.
But Ahrendts isn't telling the whole story - the part that's relevant to the AAPL stock price.
You see, although Apple isn't offering any deals itself, the Cupertino, Calif.-based company was happy to let other major retailers such as Target Corp. (NYSE: TGT) and Best Buy Co. Inc. (NYSE: BBY) use products like the iPad and Apple Watch as "doorbusters" and other incentives.
So Apple stock will get all the benefits of the Black Friday and Cyber Monday hoopla with none of the costs.
"Right now, Apple has what are generally regarded as the best products out there, and is selling about as many iPhones as it can make," Yory Wurmser, retail analyst at eMarketer, told Fortune. "It has little incentive to undermine its brand with lower prices, even in the case of iPads or Apple Watches."
The other retailers bear the cost of the discounts, so Apple maintains all of its plump profit margins on every sale. Apple is also saving money by not having to pay for extra staff or overtime hours in its own retail chain.
It's the sharpest scheme since Tom Sawyer bamboozled his pals into paying for the privilege of whitewashing his Aunt Polly's fence.
But what about the business Apple is losing by failing to offer any traditional holiday deals?
Here's why that's not a problem...
[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
Booming Holiday Sales Will Help the Apple Stock Price
Ironically, early reports on the Thanksgiving shopping weekend indicate Apple sold at least as much merchandise as it would had it offered its own deals. Apple's lackeys, er, retail partners, did a stunningly good job of moving Apple devices.
For instance, Target reported that it sold an iPad every second on Thanksgiving Day, and boasted that its Apple Watch deals brought a lot of shoppers through the door.
Apple also expanded retail availability this year, ensuring its products could be bought at stores like Costco Wholesale Corp. (Nasdaq: COST), B&H Photo, and Staples Inc. (NYSE: SPLS) as well as Target.
"Because of this expanded distribution, Apple probably had the strongest Black Friday sales in its entire history," Global Equities Research analyst Trip Chowdhry said in a research note.
Retailers had deals not just on iPads and Apple Watches, but also on Apple TVs and Mac computers.
All this helps the Apple stock price by buttressing the non-iPhone business. Apple gets about two-thirds of its revenue from the iPhone, but because last year's December quarter was so huge, growth this year is expected to stay in the single digits.
That's made many analysts pessimistic about the current quarter, Apple's biggest of the year.
But exceptionally strong sales from Apple's other devices - combined with the higher margins preserved by not offering any Thanksgiving weekend deals - will add the pop in earnings Wall Street so loves.
So far Wall Street is missing this. AAPL stock was up just 0.42% yesterday (Monday), closing at $118.30. They'll likely be surprised in January when Apple reports its 2016 Q1 earnings - and the Apple stock price jumps higher.
Follow me on Twitter @DavidGZeiler or like Money Morning on Facebook.
Should I Buy Square Stock? The Square IPO is one of the most anticipated deals of 2015. Investors are hoping it will revive the sluggish IPO market, which only saw one tech deal last quarter. But is Square a good investment? Here's everything you need to know...
Related Articles:
- Fortune: Apple Conspicuously Absent from Black Friday, Cyber Monday Deals
- Investor's Business Daily: Black Friday Sales Data Point to 'Apple Holiday Season'
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.