Why Apple stock popped today

The iPhone maker has its eye on another revenue stream.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of Apple Inc (NASDAQ: AAPL) climbed higher on Wednesday, adding as much as 4.1%. At the end of the trading day, the stock was still up 3.8%.

The broader market indexes rallied, which no doubt contributed to the iPhone-maker's rise. However, news also broke that Apple was making a further push into the digital-advertising space, which could spell additional upside for the stock.

So what

As a result of its push to protect consumer privacy, Apple has been widely credited with the growing disarray for other companies in digital advertising. That said, it isn't above generating a new revenue stream in the ad-tech space.

Apple's entry into an adjacent field shouldn't be taken lightly, as it has the resources to establish a beachhead and a long history of building the necessary expertise from the ground up. It isn't yet clear if this step by Apple is intended to serve ads solely within the company's digital footprint, or if it has designs to expand beyond its own ecosystem. It could also signal the upcoming launch of an ad-supported version of its streaming-video platform, Apple TV+.

Recently, Netflix became one of the last holdouts to embrace a lower cost, ad-supported tier, leaving Apple as the only major subscription streaming service without one.

Specifically, Apple is looking to hire a senior manager to run a demand-side platform (DSP) in the company's advertising business, according to a report from Digiday. The job listing suggests that Apple is planning to design its own DSP. 

The successful applicant will be responsible to "drive the design of the most privacy-forward, sophisticated demand side platform possible," according to the report. Additionally, Apple is looking for a candidate with experience building a mobile-focused DSP and the experience necessary to optimize "mobile campaigns using measurement and attribution."

Apple is targeting a candidate with a minimum of eight years of technical experience and product management, as well as a proven track record of initiating "advertising-related products for audiences in the hundreds of millions."

Now what

Apple's services segment has been wildly successful, generating nearly $20 billion in revenue in its fiscal third quarter (ended June 25). The company now boasts more than 860 million paid subscribers. This move could open up a world of possibilities and take Apple stock to the next level.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Danny Vena has positions in Apple and Netflix. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Apple and Netflix. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple and Netflix. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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