Apple Analyst Talks 'Fortnite' Lawsuit, WeChat Ban And 'Worrisome' Slowdown In China

From removing “Fortnite” to a potential ban on WeChat in the U..S, there has been a lot of news related to the Apple, Inc. AAPL App Store in recent weeks.

Bank of America analyst Wamsi Mohan said Tuesday the safest place for investors to watch the drama unfold is from the sidelines given Apple’s premium valuation.

“Fortnite” maker Epic is suing Apple on antitrust grounds, and Mohan said the lawsuit puts a public spotlight on the fairness of Apple’s 30% take rate on apps.

At the same time, Mohan said President Donald Trump’s executive order banning WeChat and other Chinese apps is “quite ambiguous.” He said the biggest risk for Apple investors would be if the executive order applies to Weixin, which is popular in China and could potentially dampen iPhone demand there.

Related Link: Here's How Much Investing $1,000 In Apple At Dot-Com Bubble Peak Would Be Worth Today

Problems In China: Apple store revenue growth is already slowing in China due to the reopening economy and difficult year-over-year comps in the second half of the year. Mohan called the deceleration “worrisome,” and said he's concerned Apple will experience similar deceleration in other geographical areas once other economies rebound as well.

Finally, recent reports have suggested Apple may begin relying more heavily on bundling some of its services, which Mohan said is a way for the company to better monetize some of its less popular services, such as Arcade and News+.

“Bundling will likely lower churn rates as users are more likely to stick with the broader ecosystem as they subscribe/use more services on the platform.” Mohan said.

Bank of America has a Neutral rating and a $470 price target for Apple.

Benzinga’s Take: Apple’s businesses are firing on all cylinders ahead of the highly anticipated launch of the first 5G iPhone. However, with the stock up 122.6% in the past year and the company’s market cap sitting at $1.96 trillion, further upside for the stock in the near-term may be hard to come by.