Apple Inc. (NASDAQ:AAPL) stock has not had an easy time lately. A fresh analyst report warning about weak iPhone X orders landed on Wednesday, and at least two firms have downgraded Apple stock this month for that very reason.
However, we also received data on the Q4 iPhone sales mix from Consumer Intelligence Research Partners (CIRP) and Canalys which contradict each other. If there’s anything we can learn from these contradictions, it’s that no one other than Apple itself can really have any real clues about the iPhone sales mix in Q4. The fact that Apple stock continues to slide seems to suggest that investors are starting to side with the growing number of bears on Wall Street.
iPhone X demand has “gone sour quickly”
In a note to investors on Wednesday, JPMorgan analyst Narci Chang and team said they recently “picked up more signs of weakening iPhone X orders.” They’re now expecting iPhone X builds to fall 50% quarter over quarter, which is an even steeper decline than that of the iPhone 8 and 8 Plus. They expect the weakness in iPhone X orders to remain weak through the first half of this year because “high-end smartphones are clearly hitting a plateau this year.”
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The JPMorgan team downgraded Apple’s supply chain in the middle of September because they felt that expectations for the iPhone X were mostly priced in at that time. They also predicted that “sustained growth into the 2018 iPhone cycle is unlikely, given limited design changes in the next cycle.”
They now believe that the peak in iPhone sales came even earlier than they had expected previously. They expect component builds for the iPhone X to end in May and new iPhone component builds to start earlier than usual, in late June.
Apple stock has been slipping since Tuesday afternoon and is now down by more than 1% on Wednesday as it fell as low as $174.57 in intraday trading. The pullback indicates that investor sentiment is shifting further into bearish territory as the number of reports about weak iPhone X demand grows.
Apple stock lives and dies on the iPhone X
This week CIRP and Canalys both released iPhone X sales data, and the two firms’ results clearly contradict each other. CIRP said on Monday that together, Apple’s three newest iPhones accounted for 61% of the iPhone mix during Q4. That may seem like a solid result, but the firm added that Apple’s iPhone 7 and 7 Plus accounted for 72% of the mix in Q4 of 2016. The iPhone X accounted for only 20% of the iPhone sales mix, while the iPhone 8 was 24% of the mix and the iPhone 8 Plus was 17% of the mix.
However, CIRP also said that a year-over-year comparison for iPhone sales mix is “tricky at best” because the iPhone X wasn’t available for the entire quarter. Further, Apple is now selling eight different iPhone models, segmenting the iPhone “pie” even more than ever before, and the most advanced and most expensive model was delayed five weeks after the iPhone 8 and 8 Plus.
CIRP’s data corroborates what some analysts reported almost anecdotally late last year, which was that the older iPhone models did fairly well. According to CIRP, the iPhone 7 and 7 Plus accounted for nearly 25% of the mix in Q4.
Data from Canalys tells a different story when it comes to iPhone sales mix, however. The firm said Apple shipped 29 million iPhone X units in Q4, making it “the world’s best-shipping smartphone model over the holiday season.” Canalys also reports that of that 29 million, 7 million units were shipped in China. This could account for a significant portion of the difference between Canalys’ and CIRP’s data because CIRP only surveyed U.S. buyers.