What the new iPhones mean for Apple stock

💡 IOS16 | Apple unveiled its latest iPhone 14 devices, along with new versions of the Apple Watch and Airpods headphones at a special event on Wednesday. While we expected Apple to raise iPhone prices this year, given rising component prices and supply constraints, the company has surprisingly held down prices across the entire line. .

However, we think it’s still likely that the average iPhone price will trend higher in this cycle as well, for two reasons. Apple has launched two Pro versions and two standard versions of the device. We think Apple should be able to attract a lot of customers to the Pro versions of the devices this time around, as they seem to offer a much better value proposition. For example, the Pro devices offer exclusive features such as always-on display, significant camera improvements and design changes, the signature iPhone notch (which houses the front camera and sensor Face ID) being replaced by pill-shaped cutouts that pop up alerts and notifications. As for the regular iPhone 14, the 6.1-inch devices are priced at $1,019. Apple has also kept last year’s mobile processor, the A15, in the iPhone 14, which could help bolster margins to some extent, given that chip production costs and production yields are getting smaller. improve over time. Apple has also continued this strategy of increasing the value of its Apple Watch range by launching a new Apple Watch Ultra, which is priced at 999 euros, compared to 499 euros for the Apple Watch SE model.

The launch of these new devices takes place in a relatively difficult macroeconomic environment. US GDP has contracted over the past two quarters and consumers have cut retail spending amid rising inflation, while prioritizing services and experiences. However, we don’t expect adoption of Apple’s new devices to be significantly affected. For example, over the past two quarters, iPhone sales have grown an average of 4% year over year, despite the general economic contraction. Additionally, mobile carriers seem to be heavily promoting the new devices, as they see it as an opportunity to attract more high-value customers to their newly built 5G networks. For example, AT&T and T-Mobile are offering the new iPhone 14 Pro to customers for free under certain conditions.

We have a valuation of 178 dollars (175 euros) per share for Apple, which represents an advance of approximately 14% on the current market price. See our analysis on Apple’s valuation: Is AAPL Stock Expensive Or Cheap ? for a look at what’s driving our estimate of Apple’s price. Also see our Apple revenue analysis for more details on the company’s top revenue sources and how they have evolved.

With inflation rising and the Fed raising interest rates, Apple has fallen 12% this year in the US. Can it fall further? See how low Apple stock can go by comparing its decline to previous stock market crashes. Here is a summary of how all stocks performed during previous stock market crashes.

Article translated from Forbes US – Author: Trefis Team

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