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Apple Pledges $400M To Address California’s Housing Crisis

support@smarteranalyst.com (Ben Mahaney)

Apple Inc. (AAPL) has announced that it will be providing over $400 million toward affordable housing projects and homeowner assistance programs in California this year.

The tech giant says that the pledge will produce over 250 affordable housing units of which many will be “reserved for veterans, the homeless or formerly homeless, and residents with developmental disabilities.”

In a press statement on July 13, Apple’s vice president for Global Real Estate and Facilities said, “At a time when so many members of our community are facing unprecedented challenges, we believe it’s critical to make sure that their hopes for the future are supported through tangible programs and results.”

In November of last year, Apple made a $2.5 billion commitment to address California’s housing shortage and rising property prices. The company will see that affordable housing investments receive $1 billion and an additional $1 billion will go toward first-time buyer mortgage assistance. Also, land owned by Apple will be made available for affordable housing in the amount of $300 million.

In a press statement on November 9, 2019, Apple CEO Tim Cook and California Governor Gavin Newsom jointly addressed the housing crisis in California. Cook stated, “Before the world knew the name Silicon Valley, and long before we carried technology in our pockets, Apple called this region home, and we feel a profound civic responsibility to ensure it remains a vibrant place where people can live, have a family and contribute to the community.”

Apple said they will provide $150 million in Bay Area housing with a public-private partnership with “Housing Trust Silicon Valley.” Apple also will give $50 million to Destination: Home to address the homeless crisis in Silicon Valley.

Governor Newsom said, “This unparalleled financial commitment to affordable housing, and the innovative strategies at the heart of this initiative, are proof that Apple is serious about solving this issue. I hope other companies follow their lead.”

Wedbush analyst Daniel Ives also sees Apple taking the lead- with its valuation. On July 13, the analyst estimated that by next year Apple will be worth $2 trillion. "We believe in China alone, between 60 million to 70 million iPhones are in the window of an upgrade opportunity over the next year with Apple going aggressively at all price points (SE, iPhone 12) to cement its installed base despite competitive pressures from domestic players.”

Ives reiterated a Buy rating on Apple’s stock and raised the price target from $425 to $450 which suggests 13% upside potential.

Likewise, Morgan Stanley analyst Kathryn Huberty maintained a Buy rating on the company’s shares and also rose the price target from $340 to $419 (implying 5% upside potential). She highlighted Apple’s iPhone trade-in program which “can unlock $147 billion of value and fund one-third of iPhone purchases over the next three years.” She says that with the upcoming 5G phones, the trade-in service represents an “under-appreciated competitive advantage.”

Apple’s stock is up 36% year-to-date with a Strong Buy analyst consensus that breaks down into 26 Buy ratings versus 6 Hold ratings and 1 Sell rating. The $357.99 average price target implies 10% downside potential for the shares in the coming 12 months. (See Apple's stock analysis on TipRanks).

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