Apple Inc. (NASDAQ:AAPL) stock continued its upward mark on Monday as investors cheered the iPhone X launch, which already looks like a massive success. Oh yes, and by the way, Apple is releasing the results from its most recently completed quarter this week. Neither investors nor analysts seem to care about that, judging from the plethora of analyst reports focusing on the iPhone X with little mention of this week’s earnings report.
iPhone X demand is “off the charts”
Apple probably has media hype to thank for some of the demand for the iPhone X, given the plethora of posts calling on fans to get up in the middle of the night to preorder the phone and even keep multiple browser tabs open. This caused Apple’s website and other websites that offered iPhone X preorders to crash in the early morning on Friday.
Apple described iPhone X demand as “off the charts,” and analysts from multiple firms quickly commented on Friday that lead times for preorders climbed quickly to five or six weeks within minutes of opening. Preorder lead times remained at five to six weeks over the weekend.
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Bank of America Merrill Lynch analyst Amit Daryanani said in a note to investors on Monday that they’ve checked preorder lead times for the iPhone X in the U.S., the U.K., Germany, China, Japan and UAE and found that the five- to six-week timeframe is the same across geographies, carriers, colors and even memory size. He believes that Apple could simply trying to be conservative and that buyers might receive their phones earlier than that.
Looking at his comment from a conspiracy theorist view, one could question whether Apple is trying to make the iPhone X harder to get than it really is. There is no denying that some consumers just want something because it’s hard to find, and some analysts were even offering ideas about what Apple could do to convince people the $1,000 price tag is worth it. Making something seem rare certainly would help in this regard, although we probably won’t ever know the truth.
Interestingly, the company moved the delivery date for some of those who preordered the phone up to Nov. 3, even after they had received an email putting their delivery date later in the month. Thus, it seems that suddenly, the supply isn’t as bad as the media was reporting earlier.
On the other hand, Apple may simply have reached the tipping point in production, and the floodgates of supply may finally have burst open. You can bet that everyone will be watching this.
iPhone 8 attracts new Apple users
Nomura Instinet analyst Jeffrey Kvaal said on Monday that although iPhone 8 and 8 Plus sales have been “underwhelming” thus far, they have been adding new iOS users. His analysis of data from SensorTower found that the number of unique app downloads within the first week of the iPhone 8 launch was 45% higher than it was during the iPhone 7 launch and 30% higher than during the iPhone 6 and 6s launches.
He also noted that mobile carriers in the U.S. have reported “healthy” demand for the LTE-equipped Apple Watch 3 model. He estimates that the four main mobile carriers sold 400,000 to 500,000 units during the smartwatch’s first 18 days of availability during the third quarter. He notes that shipment times are still at one to two weeks going into the seasonally strong December quarter. However, he adds that the mix of LTE versus Bluetooth Apple Watch models isn’t clear.
“More powerful” bull case for Apple stock?
Daryanani feels that the bull case for Apple stock is now “more powerful” than it was 90 days ago because his view has shifted from a “supercycle” thesis which implies unit growth of more than 20% to a “super-long” thesis in which “units/revenues/EPS should grow double digits” in fiscal 2018 and 2019. He envisions a “relatively slow ramp vs. solid demand” that lasts for the next two years, pushing average selling prices and margins higher” and stretching the current iPhone cycle “beyond a one-year cadence.”
Apple stock rose by as much as 2.13% to $166.52 during regular trading hours on Monday, adding to Friday’s gains.