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Last week, I explained how Apple (AAPL) is perfectly positioned and primed to profit from its new iPhone trio: the 8, 8 Plus and X models.
But over the last week, I’ve received tons of reader comments about the iPhone X’s unprecedented starting price at $999. Loads of readers want to know whether Apple has priced itself out of the smartphone market with its newest product lineup.
So this week, we’re going to take a closer look at the new iPhones, especially the iPhone X. Will the X be the monster that Apple hopes? Or, will it be a massive flop?
Read on and I’ll let you know what I recommend that my Safe Money Report members should do with their Apple holdings.
First off, here’s a graphic that shows how the iPhone’s price has developed since its first release about 10 years ago.
Apple’s forthcoming top-of-the-food-chain iPhone X features a colorful OLED display with more than 2 million pixels. What does that mean? For starters, that gives buyers sharper text for reading, more-impressive video playback and more. Better yet, it has a screen that runs from edge to edge, so you get a bigger viewing area without having to carry a larger phone.
Our Cupertino, Calif., friends have also taken the Touch ID technology to a new level. But rather than training your brand-new iPhone to recognize your fingerprint and/or thumbprint, you can register your face with the iPhone X so that it automatically unlocks when you look at it.
Apple calls it Face ID. But we’ve seen this kind of innovation before in phones such as the Galaxy S8. But Apple says its face-unlock uses 3-D imagery that’s even more secure. It says the new technology can’t be fooled even by a mask made by a Hollywood professional. And they say the face scanner’s more secure than fingerprint locks.
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But if you don’t want to wait for Oct. 27, the first available date to order the iPhone X, the iPhone 8 and 8 Plus still have plenty to offer in the meantime. (Even better, those start shipping today.)
The iPhone 8 and 8 Plus feature what Apple has billed as a new design, with glass on the front and back as well as louder speakers, faster processors and upgraded cameras.
All three devices offer wireless-charging and new gyroscopes and accelerometers to improve augmented-reality experiences.
But does the regular fall release of a new iPhone suite guarantee an instant wave of profits for the company, like we’ve seen happen during the past decade?
Apple is trying to thread a needle with more new phones and multiple release dates.
The company wants to generate buzz and sales with the iPhone X, which will cost from $999 to $1,149. And it hopes this buzz will get many people to buy the upgraded iPhone 8, which starts at $699, or the iPhone 8 Plus, which starts at $799.
Unveiling three phones — the first time Apple has done so — brings risks.
There’s a couple of ways this marketing plan could go for Apple:
- Consumers see the phones as way too expensive, and the plan completely flops. Sure, some people will be crazy enough to drop about $1,000 or more on a new iPhone. After all, it’s the 10th anniversary and they just need to have the latest and greatest technology. But there won’t be enough market share for a viable product.
- Or, buyers will consider the phones such an upgrade over the other iPhones that they’ll be chomping at the bit to find one.
Here’s what some Wall Street analysts are saying:
“The high-end Chinese phone market is super competitive and customers are very discerning but also enthusiastic. If Apple can get something that rings the bell [with them], then this will work,” says Benedict Evans, a partner at Andreessen Horowitz, a venture-capital firm.
“This year’s event marked one of the most highly anticipated product announcements in recent years, and from a product perspective, the company did not disappoint… Fundamentally, we think the excitement surrounding the new form factor/features will drive increased unit demand in addition to mix shift toward the higher-end device ($999), which should enable one of the strongest iPhone cycles in recent years,” reports RBC Capital Markets’ Amit Daryanani.
“Starting in late 2017, we see an iPhone super cycle driven by accelerating upgrades due to new augmented-reality applications, better battery life and new form factors. Revenue grows 27% in FY18 driven by 40% iPhone revenue growth (23% unit growth) and 20% Services growth,” Katy Huberty, Morgan Stanley.
The graph below reports the consensus Wall Street expectation for Apple’s stock price.
As you can see, the current price is well below target.
But, Wall Street is known for being overly enthusiastic. That’s why I rely on my own research and well-regarded buy-side money managers when I make my buy or sell decisions.
And as I explained last week, I believe Warren Buffett said it best when he said:
“People want the product. They don’t want the cheapest product. Apple strikes me as having quite a sticky product, and an enormously useful product to people that use it. The degree to which people’s lives center around the product is huge.”
And this time I am sticking with Warren, as Apple remains a high-conviction holding in the Safe Money portfolio. In fact, I believe Apple’s stock price could explode upward and blow through the Wall Street analysts’ consensus.
That’s because, as I’ve explained previously, I believe the sky’s the limit for a group of carefully selected growth stocks in the current environment of high central bank intervention and low interest rates.
Indeed, in the Safe Money Report, I am in the process of expanding my favorite picks from the Dependable Dozen to the Sweet Sixteen. And Apple is one of the sweetest of the 16.
To get the inside track on the other core holdings and to receive the bonus selections in the Profit Accelerator portion of the portfolio, subscribe today.
Best wishes,
Bill Hall
P.S. Of today’s 40 top-performing weed stocks, eight posted gains of 2,000% … 3,000% … 4,000% … up to 5,000% over the past two years. And some of those gains came in as few as five days. Another 12 pot stocks have posted gains of between 1,013% and 1,620% — some, in as few as two weeks. Think of it: 20 of these top marijuana stocks — fully HALF — posted gains of 1,000% or better. The other half posted gains of between 500% and 960% — some in as few as two months. Read more here …
Bill Hall is the editor of the Safe Money Report. He is a Certified Public Accountant (CPA), Chartered Financial Analyst (CFA) and Certified Financial Planner (CFP). Besides his editorial duties with Weiss Research, Bill is the managing director of Plimsoll Mark Capital, a firm that provides financial, tax and investment advice to wealthy families all over the world.
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ARMS RACE
The fact that I-Phones are still referred to as “phones” suggests the name or brand is old, not the new functions. Clearly, its way more than a phone. Instead of Smart Phone, try a sophisticated, powerful mobile computer device with telecommunications functions. You can get a plain-Jane cell phone for far less money.
Look at it as a kind of Arms Race between Android, Apple, and Samsung. They keep raising the bar. However, this race may end if the easy money or credit used to fuel it diminishes in future years with higher interest rates. Cheap money or credit is the fuel for this phone war or race. Apple will come down hard if we have another recession or bear market, probably -45%. Always keep risk in mind. For retail “buy and hold” investors who buy-in at these lofty valuations, everything must keep going well to stay in the black.
What the iphoneSC that was released in September 2013, this is an excellent iPhone at an excellant price 100 to 200 dollars, it allows human beings to work on the go. It allows easy access to the internet. Its the greatest piece of technology that has come in since robotics was first envisaged. Its all helping create the biggest boom that the world economy has ever seen. Its parts of a Kuznets fixed short term investment cycle that the last economic cycle is going through. We are going through a period of mass high tech consumption in this prosperity, recession, depression and improvements cycle that we are in. We are lived through an age of high end world media consumption where uber is making personal transport much easier and you can get a copy of the worlds high end business paper the financial yes in virtually every second grocerrys and newsagents shop that human beings go into. We live in interesting times as the Chinese say. Let the boom begin and it to be an even bigger boom than the last boom.
I am Apple through & through, no matter the price!
My idea…if a new product comes onto the market…..it should be 5x better…is it ?MMMmm
My family was loyal iPhone users but after the iphone5 we saw prices that kept going up as our privacy went down. We have since decided to go Android and everything is so much easier and cheaper then the iPhone experience.
Champing at the bit. Champing – not chomping. Jus’ sayin’.
The “notch” at the top of the X screen (called the “unibrow” by some) has got to be the ugliest, most illogical feature ever put on a phone. Then they will charge $999 PLUS the cost of the wireless charger (better part of $100). This is like buying a Rolex watch. It’s for people that want to show off.
I agree with Warren Buffet that Apple has brilliantly ‘sticky’ products – as long as alternative phones are unable to easily work and sync with other Apple products.
Many Apple aficionados, including myself, think their products are great but over priced. If you have invested in an ‘Apple world’ it is difficult to get a non Apple product to easily work and so acts as a major barrier to competition.
If someone could break that barrier, then I think Apple would be in trouble