Apple Inc. May Need To Raise iPhone Prices: SG

1
Apple Inc. May Need To Raise iPhone Prices: SG
JESHOOTS / Pixabay

Apple has scheduled a big event for tomorrow and is expected to unveil the iPhone 6S, the iPhone 6S Plus, and possibly an Apple TV refresh. But might the company raise international prices for its flagship phone at the same event? It’s certainly possible, as Apple’s margins have been pressured by the strengthening of the U.S. dollar versus foreign currencies.

Will Apple raise prices in Europe?

In a report dated Sept. 7, Societe Generale analyst Andy Perkins notes that while Apple has raised iPhone prices in Canada, Japan, and Australia, it hasn’t raised prices in Europe yet. Since the company released the iPhone 6 and iPhone 6 Plus last year, the value of the euro compared to the U.S. dollar has plunged, putting pressure on Apple’s international margins and the average selling price of the iPhone.

Corsair Capital Adds 17.5% In 2021, Notes “Change In Leadership” In Markets

According to a recent interview, Corsair Capital's founder Jay Petschek did not plan to be a hedge fund manager. After holding various roles on Wall Street, Petschek decided to launch the fund in January 1991, when his family and friends were asking him to buy equities on their behalf. He realized the best structure for Read More

Perkins estimates that the 16-gigabyte SIM-free version of the iPhone 6 is selling for about $667 in the Eurozone right now. That’s a 15% decline from the average retail price of $780 in Europe a year ago when the phone was introduced. As a result, he thinks it’s possible Apple will raise the price of the iPhone in the Eurozone, possibly when it reveals the iPhone 6S and iPhone 6S Plus tomorrow.

iPhone demand may drop

Overall, he estimates a $16 impact on the average selling price of the iPhone due to currency headwinds. While Europe is mostly to blame for that, he notes that China now also bears some of the responsibility for that decline. He thinks Apple could up iPhone prices in Europe by as much as 15%, which he thinks could cut Apple’s earnings by as much as 5% because demand for the iPhone might drop.

In spite of this, the analyst still expects Apple will sell 241 million iPhones at an average selling price of $648 in fiscal 2016, which begins in October.

Apple shares climb today, but what about tomorrow?

As is often the case with Apple stock, shares are rising today before tomorrow’s event. The stock rose as much as 1.79% to $111.20 per share during regular trading hours today. Usually Apple shares fall on the day of big events, especially while the events are happening, being true to the stock trading adage “Buy on the rumor, sell on the news.”

Of course we’ve been hearing plenty of rumors about the iPhone 6S and iPhone 6S Plus for the last year or so. The phones are expected to be the same size as last year’s iPhone 6 and iPhone 6 Plus but have a Force Touch display and an improved processor, camera and other components. There have also been murmurs about a rose gold version and (to a lesser extent) an upgraded version of the less expensive iPhone 5C, which some are calling the iPhone 6C.

Updated on

Michelle Jones is editor-in-chief for ValueWalk.com and has been with the site since 2012. Previously, she was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Email her at [email protected]
Previous article Bill Ackman Says “I’m Bullish On China”
Next article Most Assets Hurting, But One Stock Market Bucked The Trend [Chart]

No posts to display