Sep. 09, 2023 7:00 AM ET Apple Inc. (AAPL)
- Apple stock price historically drops the day after new iPhone releases, but the new product releases will assert Apple’s dominance in the long term.
- This year’s new iPhone event is expected to focus on higher price point versions to increase the average selling price and margins.
- An analyst predicts a 20% increase in Apple’s stock due to higher pricing justified by improved chip, battery, and photo technology in the new iPhone Pro models.
- Expect the higher price announcements to be negatively received, but understand the importance of its pricing strategy.
This article discusses Apple’s pricing strategy for its upcoming iPhone 15 and the potential impact on the company’s stock price. The key points covered in the article are as follows:
- Historical Stock Price Reaction: Historically, Apple’s stock price has often dropped after new iPhone releases, with approximately 75% of such events leading to a decline. However, the article suggests that investors may already have factored in this trend, as Apple’s stock price had recently decreased by approximately 5%.
- Pricing Strategy: Apple’s primary objective with the new iPhone release is to continue its pricing strategy, which involves making the Pro versions more attractive to customers. This strategy aims to encourage customers to upgrade to higher-priced models, increasing the average selling price and margins for Apple.
- Expected Product Announcements: The article outlines the expected product announcements for Apple’s September event, which include the iPhone 15 and iPhone 15 Plus, as well as the iPhone 15 Pro and Pro Max. The Pro models are expected to have more significant upgrades and higher price points.
- Analyst Predictions: Wedbush analyst Dan Ives predicts a 20% increase in Apple’s stock price due to the pricing strategy for the iPhone 15 Pro and Pro Max. He believes that a price increase of $100 for these models is justified by improved chip, battery, and photo technologies.
- Customer Migration to Pro Models: Apple’s pricing strategy aims to encourage customers to migrate to the higher-priced Pro models by offering features such as faster chips, improved cameras, and additional enhancements. The article lists several reasons why customers might opt for the Pro models, including better performance, premium materials like titanium, and superior camera capabilities.
- Impact on Revenue: The article suggests that the pricing strategy could lead to an increase in iPhone revenue for Apple, particularly if customers choose the more expensive Pro models. Sales estimates indicate growing popularity for iPhone Pro models, contributing to potential revenue growth.
- Conclusion: The article concludes that Apple’s pricing strategy is likely to be effective in maintaining or increasing iPhone revenue as the company faces saturation in iPhone unit sales. While the immediate reaction to price increases may be negative, the strategy is viewed as a viable revenue-increasing approach over the long term.
Overall, the article emphasizes the importance of understanding Apple’s pricing strategy and its potential impact on the company’s financial performance and stock price.
