Apple’s shares slipped on Wednesday with gains in most tech stocks.
Investors are getting a little nervous about the outlook for Apple iPhone sales.
Apple (ticker: AAPL) generates more than half its revenue from smartphones, without counting the billions of dollars brought in by the App Store and the growing suite of iPhone-based services. And right now, there are concerns that a combination of COVID-related manufacturing shutdowns in China, component shortages, and signs of a softening consumer economy are jeopardizing current street expectations for the iPhone.
Apple’s shares have missed Wednesday’s slight rise in tech stocks. They are one of a handful of large-cap tech stocks that are trading in the red. Apple closed 0.1% higher at 140.52, while the Nasdaq Composite gained 1.5%. The stock is up about 21% so far this year.
One reason for Wednesday’s weak performance is a Nikkei Asia story that says Apple’s development program for the iPhone 14, expected to arrive this fall, has been hampered by the lockdown in Shanghai in relation to China’s zero-Covid policy. Reporting its March quarter results, Apple warned that revenue in the June quarter could hit between $4 billion and $8 billion due to Shanghai-related problems with the supply.
The Nikkei article, citing “multiple sources with direct knowledge of the matter,” says that the worst-case scenario could be a delay in manufacturing the new phone.
Apple has a permanent policy of not discussing unannounced products and production plans. It did not immediately respond to a request for comment.
Meanwhile, Loop Capital analyst Anand Barua thinks Apple may scale down its production plans for iPhones later this week. In a research note, he said Wall Street estimates that iPhone sales in the June quarter could be much higher, between 4 million and 6 million units, and that he estimates the number sold in the March quarter to be 5 percent higher than the actual figure. million more. ,
Apple doesn’t disclose unit sales of iPhones, so there’s no way to know the actual number.
Baruah thinks iPhone revenue for the June quarter could be at risk, but he also noted that consensus expectations for the September and December quarters may be too low. This is a reflection of his view that the average selling price for the Street iPhone is being underestimated, as consumers tend to choose higher-end models with higher memory capacity than cheaper models.
For the June quarter, Baruah saw Apple selling 41 million units at an average price of $920. The Wall Street consensus call is for 47 million units at an average price of $834, they wrote.
For the entire calendar 2022, he predicted Apple would sell 229 million phones at an average price of $927, while his peers saw 242 million units at an average price of $852. Baruah’s call pencil generates revenue of $212 billion, which is $206 billion more than the Wall Street consensus.
Barua maintained his Buy rating on the stock with a target of $180 for the price.
Eric J. Write Savitz to [email protected]