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Here's why Wedbush analyst believes Apple (AAPL) will win Fortnite royale battle

August 14, 2020 8:37 AM

Wedbush analyst Dan Ives believes that Apple (NASDAQ: AAPL) is well-positioned to defend its position against Epic Games, the maker of Fortnite. The video game producer started a battle royale against Apple, and its 30% AppStore fee structure, by giving a permanent 20% discount on in-game Fortnite purchases if directly bought from the company, which practically bypasses AppStore.

Moreover, the maker of Fortnite has filed a lawsuit against the Cupertino-based tech giant before the U.S. District Court of California yesterday. The lawsuit describes Apple’s 30% AppStore fee as “unreasonable and unlawful practice”.

This can grow into a major problem for Apple given that Fortnite attracts around 350 million registered players worldwide. However, Ives believes that Apple is well-positioned to defend its AppStore fee structure.

“Epic Games has taken a risky and calculated path in going after Apple at a time that Cook & Co. are under the bright spotlight both in the Beltway and in the EU around its App Store stronghold and 30% fee structure,” the analyst said in a note sent to clients.

“While Epic will play into Fortinet's massive installed base which is unrivaled and drum up support (through social media, etc), legally Apple has successfully defended its App Store moat again and again with this time being no different in our opinion," it was added.

However, Wedbush’s analysts also noted that Apple has to play this "poker" game in a smart manner, avoiding “a ripple impact which developers globally are watching carefully."

Wedbush maintains an Outperform rating on Apple stock with a 12-month price target set at $515 per share, an 11.9% premium compared to yesterday’s closing price. The firm's price target is the highest on Wall Street.

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