Morgan Stanley: China Slowed App Store Revenue Growth in June

07 JULY 2022 - The App Store’s still growing, though that growth has slowed. That’s the top line from Morgan Stanley analyst Katy Huberty, not Morgan Stanley analyst Eric Woodring. Apple 3.0 ran part of a note she wrote. According to that, the issue is China, while the problem is missed expectations. Here’s what happened: For the month of June, App Store revenue grew 9% or more year-on-year in “6 of the App Store’s 10 largest markets.” And yet, as a whole, growth in the App Store was only up 2.5%.

Because, China. According to the analyst, “App Store net revenue growth in China inflected to [a] 6% Y/Y [decline] in the month of June…” That accounted “for more than 100% of the total App Store deceleration in June vs. May,” according to the note.

That was unexpected. And - of course - the unexpected tends to mess with expectations. For example, for the June-quarter, Morgan Stanley had been expecting App Store revenue growth of 6%. They’re now expecting 5% - a miss of about $67M on someone’s part.

Worth watching, though not a huge source of worry, it seems. Morgan Stanley maintains an “Overweight” rating on Apple shares. The firm’s price target on the shares is $185.