Apple Inc. (Nasdaq: AAPL) stock traded lower on Thursday after reports out of Taiwan claim the company has reduced its November and December iPhone 8 orders from suppliers by roughly 50 percent.
A report in Taiwan’s Economic Times newspaper cites an unnamed supplier source claiming that Apple has cut its iPhone 8 demand in half.
While the report may seem alarming, a handful of Wall Street analysts have said the news, if true, may not be a crushing blow for Apple investors. The current iPhone cycle is far from the typical cycle. In addition to the iPhone 8 and iPhone 8 Plus, Apple will be launching the 10-year anniversary iPhone X model on Nov. 3.
Apple does not officially update iPhone sales, but Rosenblatt Securities analyst Jun Zhang says iPhone 8 production cuts may be a sign Apple is anticipating robust iPhone Xdemand, which could be good news for average sales price and margins.
“Our research suggests the production mix was 50-50 between iPhone 8 [and] 8 Plus and the iPhone X, but iPhone X allocation could shift up to 60 to 70 percent in December and even more in March quarter,” Zhang says, according to Reuters.
Other analysts are downplaying the role the iPhone will play in Apple’s long-term story. Expectations for the iPhone 8 and iPhone X cycle are extremely high. But KeyBanc analyst Andy Hargreaves says iPhone sales could soon start to stagnate, and that’s OK.
“While we remain somewhat pessimistic around multicycle iPhone unit growth, Apple’s expanded market segmentation strategy seems likely to drive average gross profit per user above our previous expectations,” Hargreaves says. “The potential for Apple to exercise greater pricing power, along with further App Store growth, supports the view of the company as a franchise with subscription-like qualities rather than a regular hardware business.”
News of the potential iPhone 8 production cut comes just days after KeyBanc reported that discounted iPhone 7 models, which are now selling for around $550 in the U.S., are outselling the $699 iPhone 8.
Unfortunately for Apple investors, the stock may continue…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
