Apple Stock: Can iPhone Demand Issues Be Solved?

Posted On January 15, 2018 3:36 pm

Apple stock is trading in the red after market fears regarding a weak demand of iPhone X, and reports of intentional throttling of old iPhone speeds in order to force users to buy the new ones. Investment firm KeyBanc Capital Markets recently downgraded Apple chip supplier Cirrus Logic, citing a slowdown in iPhone demand around the world. KeyBanc Capital Markets analyst John Vinh believes that iPhone X demand is worse than that of iPhone 8/8 Plus demand due to higher prices and market saturation.

Sean Emory, founder and chief investment officer at Avory & Co, recently said in a report that Apple stock is nearing a major drawdown in late 2018 or early 2019. Emory has studied Apple stock in detail and according to his research, there is a visible trend in its movements. The trend shows that Apple stock dips almost 30% every 2.8 years.

Apple also came under pressure recently from JANA Partners and CalSTRS, two of the company’s biggest shareholders, concerning the growing addiction to iPhones among children. JANA and CalSTRS are forcing Apple to carry out research and find methods to deplete the element of addiction in its devices and mobile software.

Apple is also facing supply chain issues. The company had promised to release HomePod in December 2017, but the smart speaker is now slated to be launched for sale some time in 2018.

However, one of the biggest catalysts for Apple stock in the short term is the cash repatriation of the Trump administration’s tax reform plan. According to UBS analyst Steven Milunovich, Apple holds about $250 billion in cash overseas. UBS report says that Apple can buyback as much as $122 billion worth of its shares using the repatriation cash.

As of the end of the September quarter, Apple had $268.9 billion in cash plus marketable securities. Analysts think that Apple can make several major acquisitions in order to increase its addressable market in case the smartphone market slows down.  Earlier this month, Citi analysts Jim Suva and Asiya Merchant said in a report that there is a “40% chance” that Apple will acquire Netflix. Apple needs a media and content powerhouse in order to compete with Amazon.

 Related: Here’s Why Goldman Sachs is Excited About NVidia

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