As the likely launch date of the new iPhone 6s approaches, question marks hang over Apple for the first time in many years. Apple has had to endure its share price taking a severe beating in recent weeks, as investors and city analysts concern themselves with the growth potential of the corporation.
Apple’s China syndrome
The success of Apple in China has been a notable string in the bow of the consumer electronics giant. But now the performance of Apple in the world’s most populous nation is a source of concern for investors. This was compounded by the recent Chinese government devaluation of its currency by 2 percent, and these two issues together have combined to ensure that the Apple sharp price has fallen significantly.
Whereas not long ago Apple investors were pondering whether the corporation might become the first $1 trillion market capitalized company, this will not be an immediate concern. Apple had become the world’s first $700 billion market capped company last year, but the recent slump in its share price has seen this market capitalization figure descend to around $650 billion. Apple is still possibly the world’s most valuable publicly listed company, but it doesn’t possess quite the same unshakeable luster as a few weeks previously.
Victim of its own success
Another issue that Apple has to deal with is the burden of raised expectations. The relentless upward sales of Apple ensures that it must reach new heights on a continual basis in order to cement its own market dominance. At a certain point, it is almost inevitable that Wall Street will become sceptical about the chances of Apple continually driving up revenue and profits.
It was this scepticism that led the city to question the ability of Apple to continue growing revenue back in 2014. It was in the early month of last year that Apple’s share price took its previous kicking, as disappointing sales and a lack of new product releases combined to place Apple in a predicament at that time.
Since then, Apple has responded by producing new product lines, most notably the Apple Watch smart watch and the iPhone 6 Plus phablet. This has helped restore the confidence of the city in the corporation, and Apple’s share price consequently grew significantly. But the ability of Apple to achieve growth indefinitely has certainly been called into question recently, and the corporation is now facing its first challenge for some time.
The forthcoming iPhone 6s then will be incredibly important to Apple, as the consumer electronics behemoth attempts to reassert its supremacy in the marketplace. The flagship iPhone series has been such a bankable asset for Apple over the years that it is generally considered to be the most significant aspect of the company’s success. When all else fails – and Apple certainly hasn’t had to tolerate too much failure in recent years – the corporation simply releases a new iPhone, and everything returns to normality.
Apple orders more iPhone 6s units
Certainly Apple is not concerned about city perception of its future success or otherwise. The company has already reportedly made orders for 90 million iPhone 6s units to be delivered by the end of the year, which is significantly more than the corporations sold of the monumentally rampant iPhone 6. Clearly Apple expects to exceed previous performance in the smartphone and phablet marketplace, but is this expectation actually realistic?
What can be noted is that Apple continues to sell the iPhone series in high numbers. The company sold 47 million iPhones during the last quarter alone, which represented a 35 percent increase on this time last year. But at the same time, analysts note that Apple had actually expected to exceed this figure, which does suggest that the relentless Apple success story might be slowing down.
In accordance with this prediction, KGI Securities, the renowned Apple analyst with an impressive track record of prognosticating on the company, has forecast zero or possibly even negative growth of iPhone sales during the fourth quarter of 2015. This projection would indicate that the device actually sell less units than its predecessor, despite the apparently bullish sentiment within Apple.
Positive signs for Apple
But despite the fact that some indicators suggest that Apple should be concerned about its immediate future, not all signs for the corporation are negative. It is firstly worth noting that Apple retains a brand cachet that simply cannot be matched by any company on the planet, let alone any within the consumer electronics needs. Having been ranked number one in the recent authoritative Interbrand survey, Apple clearly carries more buzz at street level than any similar company.
We’re well accustomed to frenzied scenes when the iPhone is released, and there is absolutely no reason to believe that this will halt when the iPhone 6s hits the stores. And the potential of the company in China remains rosy, not least because consumer electronics devices are becoming more accepted in the communist state.
The Chinese government has followed a largely capitalistic model in its organization of the economy, and it recognizes that it is essential for China to embrace Western consumer electronics companies in order to succeed. Thus, China is steadily easing restrictions related to such products in the country, and this could result in a more successful iPhone release in China this time out. It is notable that the iPhone 6 was delayed in China due to government restrictions, and steadily Apple is building a more favorable relationship with the Chinese authorities.
Othe Apple analysts also believe that the iPhone 6s will be a triumph for Apple, and that the longer-term share price of the company will rapidly get back on course. Gene Munster, who covers Apple for Piper Jaffray, has recently released a report which indicates that despite Chinese concerns relating to Apple, investors should have a bullish sentiment on the corporation. Munster placed a $172 price target on Apple shares, indicating that he believes they are around 40 percent undervalued at present.
Clearly Apple does have challenges to overcome for the first time in at least 18 months. But the durability and market dominance of Apple in the last few years suggest that the corporation will bounce back with rapidity.