Apple dips even as Morgan Stanley wonders if the App Store bottomed in September
Wachiwit

Apple (NASDAQ:AAPL) shares continued to fall on Thursday, even as Morgan Stanley wondered whether September could mark the "bottom" for the App Store.
Analyst Erik Woodring, who has an overweight rating and $177 price target on the tech giant, noted that the October net revenue for the App Store fell 4% year-over-year, a 1 point improvement from September. And with international App Store downloads also having grown in October, it could be a sign that "pricing increases haven't significantly impacted demand." 
Woodring noted that China was the only one of Apple's (AAPL) three largest App Store markets -- U.S. and Japan are the others -- to show an improvement in October compared to the previous quarter, due in part to an easier comparison. Gaming continued to be a sludge, with a 12% year-over-year decline, while other categories grew cumulatively 8% year-over-year.
"All in, October marked a 4th consecutive month of App Store net revenue declines, although we're closely watching App Store performance in the month of November to better gauge whether the 1 point improvement in [year-over-year] net revenue declines in October (vs. the month of September) means declines bottomed in September and can improve into year end," Woodring wrote.
The analyst added that international downloads grew 2% year-over-year in October, despite roughly 30% price increases that Apple (AAPL) implemented earlier in the month across 25% of its App Store, including Japan, the EU and South Korea, due to weakening currencies.
"While we realize App Store downloads don't provide a perfect read into how international App Store behavior has changed following the early October pricing increases given it doesn't capture in-app purchases, it's a better initial read than net revenue per download given net revenue per download includes the impact of currency translation," Woodring added.
Woodring also noted that the COVID-19 lockdown in Zhenghou, China could negatively impact Apple (AAPL), as lead times for the iPhone 14 Pro and Pro Max have lengthened by a week, with manufacturing partner Hon Hai entering into a closed-loop production routine. 
"...We continue to monitor lead times and data/commentary out of China closely to evaluate the potential impact of COVID in Zhengzhou, and expect Hon Hai to provide an update on the situation when it reports October revenue later this week," Woodring explained, while noting that the firm's iPhone forecast for the December quarter is 84.5M shipments. 
Apple (AAPL) doesn't disclose its iPhone unit sales, but recently disclosed it generated more than $42B in iPhone revenue during its fiscal fourth quarter.