Apple Inc. is on investors’ radar as the company gears up to reveal its much-awaited new iPhone. The Street is bullish that Apple stock will gain on the back of the new iPhone, but several analysts have warned that the shares could tumble because expectations from the new phone are too high.
There is a chance Apple might not live up to the hype. Loup Ventures analyst Gene Munster, an expert on Apple, recently said in an interview on CNBC that Apple is launching its iPhone pretty late this year. The product cycle is disturbed and the uncertainty could damage sales.
Analysts think that iPhone is destined to face what iPads are facing: market saturation and product maturity. There’s a little room left for innovation. Apple keeps changing the shape of its new iPhones, along with adding some new software features. But the company needs to do a lot more to justify the hefty price tags (According to several reports Apple’s new iPhone will cost $1000).
Even if the new iPhone becomes a hit, the effects would be shown in the first or second quarter of 2018. There won’t be any short term surge in the stock.
After revealing the first iPhone about 10 years ago, Steve Jobs proudly announced that Apple was at least five years ahead of any mobile company. But the fact is that it took less than 6 years for Samsung and other mobile players to catch up. Today, Samsung, Google and OnePlus offers almost the same, if not better, features in their phones for cheaper rates.
Vitaliy N. Katsenelson, chief investment officer at Investment Management Associates, recently said in a report that Apple CEO Tim Cook lacks the charisma and vision that is needed to fill up the product innovation void that has surfaced following the maturity of iPhone. He said that Apple has doubled its R&D spending to $12 billion, but so far the company has failed to come up with any noteworthy innovation. Apple also called off its plans to make electric cars, and limited itself to making self-driving technology. Finally, Vitaliy said that Apple will face difficulties in the self-driving technology as there are several competitors and barriers to entry.
Apple stock is up over 36% so far this year.