As usual, apple (Nasdaq: AAPL) is down significantly from its highs of $175 just a month ago after the annual iPhone launch event sparked investor interest. The tech giant fails to impress without launching Mixed reality device to compete with meta pads (dead). Mine investment thesis The stock is still bearish with another failed break of the strong resistance on the recent rallies.
iPhone 14 mixed order message
Having now incorrectly predicted price hikes for iPhone 14 models, especially the Pro models, influential analyst Ming-Chi Kuo has shifted production towards the iPhone Pro models. Just 12 days after the Far Out event that launched the new iPhone, Apple had completely misdiagnosed the demand for each model to actually shift production.
Apple will certainly benefit from consumer buying of the higher priced Pro models due to the price differences. The big question is whether consumers are actually buying the higher priced items, with the potential for the economy to be in a recession and definitely facing higher inflation.
Here are the actual starting price details for the different iPhone 14 versions:
- iPhone 14 – $799
- iPhone 14 Plus: $899
- iPhone 14 Pro: $999
- iPhone 14 Pro Max: $1,099
The data seems to indicate that consumers are buying the iPhone 14 Pro models due to the limited value of the 14 Plus. The 14 Pro costs only $100 more than the Plus. Forbes even argue for buy refurbished iPhone 13 Pro Max at a discount on iPhone 14 Plus.
The data doesn’t really ask whether consumers are switching to the Pro versions, but it does question the quantities. A consumer who wants a large screen smartphone may pass the upgrade for another year when the best option starts at $1,000 for the basic version.
Other reviews actually suggest that consumers should buy a new iPhone 13 Only $699 Reduce the money paid to Apple in this cycle. iPhone 14 models may technically push higher average selling prices higher due to the shift in purchased models and the elimination of the mini, but the consumer has every reason to reach for a cheaper option.
The whole key to unlocking the iPhone 12 was the 5G chip. All the other upgrades in the iPhone 13 and now 14 models are subtle improvements that consumers can take in or leave without much indigestion. The consumer, though, doesn’t want a new phone without a 5G chip that would leave the smartphone significantly behind the network’s speed capabilities over the next couple of years. Very few consumers actually care about a better camera, processor, or emergency SOS feature.
The latest news of a camera defect in the iPhone 14 Pro Max could reach significant sizes in the short term. The guardian Owners have reported seeing the camera fail when using popular apps like Instagram and TikTok.
Apart from the unexpected stuck issue, Apple will undoubtedly solve any camera related issue in a relatively short time. The tech giant won’t see any impact on sales in the long run, but this camera issue could affect sales for the holiday period, as consumers try to shift purchases to Pro models.
What investors always miss
Investors need to understand that analysts are uniformly optimistic about Apple and that these factors are included in earnings estimates. The analyst community has 23 buy ratings for the stock and only 1 sell rating.
Wedbush analyst Dan Ives has iPhone 14 demand that matches or slightly exceeds iPhone 13 sales at ~220 million annually. As discussed above, the only way for Apple to ever increase sales is via a higher ASP than to switch to higher-priced models, with iPhone 14 prices identical in the US to the Model 13 and sizes starting at the same level.
With ASP up $100, Apple could boost fiscal year 23 sales by a whopping $22 billion. This best-case scenario would boost iPhone sales by only 10% from the FY22 level which should approach $210 billion after hitting $191 billion in FY21.
Ironically, analysts expect total sales for fiscal year 23 to rise 5%, or just $19 billion. The most reasonable discretionary service price increase of $50 fits comfortably into these sales goals without the need for analysts to raise financial goals.
Danny Ives is promoting a scenario in which Apple fails to meet iPhone 14 Pro demand due to price points and reviews that push people towards higher-end models. Apple could easily see higher ASP and fail to meet sales targets due to lack of basic supplies.
The current iPhone 14 Pro delivery dates have expired at least a month later depending on the options selected. iPhone 14 Plus will arrive faster.
The data points to a disconnection with the demand associated with the iPhone model, not any additional demand for the iPhone 14. Either way, investors should understand that Apple is unlikely to exceed the consensus estimates of the more than 80% group of analysts on the stock, despite the giant The technology is trading at 23 times its FY23 estimate after Apple slipped $20 from recent highs.
The main investor takeaway is that the iPhone 14 launch event wasn’t very pivotal at all. It appears that Apple is willing to increase revenue only by driving consumers to higher-priced models by not providing convincing technology upgrades to non-professional models.
Investors need to understand that much of the projected increases in ASP are already built into analyst estimates of 5% revenue growth in FY23. The stock should not trade at multiples that far exceed the sales growth rate.
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