At the Let’s Talk iPhone event held by Apple (NASDAQ:AAPL) on October 4, the new iPhone 4S was definitely the highlight of the event. However, there were some other announcements too like the Apple’s new personal assistant software – Siri, the public rollout of iOS 5, and its new photo and greeting card printing service – Cards. [1] It will compete with existing players in the online photo and card printing segment – Shutterfly (NASDAQ:SFLY) and HP’s (NYSE:HPQ) Snapfish as well as Wal-Mart (NYSE:WMT) and Costco (NASDAQ:COST) which offer low cost digital photography products and services.
We have a $62 Trefis price estimate for Shutterfly, which stands nearly 45% above its current market price. Its Photos, cards and greetings business accounts for nearly 95% of its Trefis price estimate.
Apple May Pose a Threat to Shutterfly’s Core Business…
Apple is a juggernaut compared to Shutterfly, which is valued at less than 0.5% of Apple’s total valuation. Its entry in the space spooked investors, which led to Shutterfly’s stock crashing nearly 8% right after Apple’s announcement.
Apple will charge $2.99 for a custom made card in the U.S., and $4.99 internationally. It is charging less than Shutterfly, which charges $3.46 for each card. [2]
… but it’s unlikely
It’s unlikely that Apple will focus on the Cards app a lot as it has a lot on its plate already. Additionally, while Shutterfly will be available on other platforms including Android which is growing rapidly, Cards will be available only on Apple’s devices. Shutterfly offers around 1,000 different card designs while Apple’s Cards will offer only 21 at launch.
Shutterfly’s stock has rebounded completely, and is currently trading at around $42, which is higher than what it was trading at before the Apple announcement.
Check out our complete analysis for Shutterfly.
Notes:
