Apple (NASDAQ: AAPL) stock is showing immediate signs of weakness in reaction to the lackluster pre-order figures for the company’s latest smartphone model, iPhone 16.
Despite the iPhone 16 series unveiling new features and enhancements, such as Apple Intelligence, pre-order analysis suggests that the iPhone 16 Pro and Pro Max have come in below expectations, Ming-Chi Kuo, an analyst at TF International Securities, indicated in a September 16 blog post.
A breakdown of Kuo’s analysis shows that the iPhone 16 series’ first-weekend pre-order sales stand at approximately 37 million units, a drop of 12.7% year-over-year compared to the iPhone 15 series. The breakdown indicates that the iPhone 16 Pro Max has seen a 16% drop compared to last year, while the iPhone 16 Pro is down by 27%.
Not all models have disappointed, with Apple witnessing a boost from the standard iPhone 16, which saw a 10% growth in demand, and the iPhone 16 Plus at 48%. The data points to a preference for the more affordable options than the Pro models.
Estimated iPhone 16 series pre-order sales. Source: Ming-Chi Kuo
With buyers seemingly showing less interest in the smartphone model, this development will likely extend AAPL’s short-term bearish sentiment. The stock ended the last trading session on September 13, down 0.25%, valued at $222, underperforming the general market, which was in recovery mode following a poor start to September. Before the market opening on September 16, the stock was down 2.5%, trading at $216.
APLL stock pre-market trading September 16. Source: Nasdaq
Apple’s play to improve iPhone 16 sales
Indeed, the pre-order figures could be demoralizing for investors hoping that positive iPhone 16 sales would spark a new record high for the stock. Interestingly, Apple recorded losses after the iPhone 16 launch, aligning with historical trends where AAPL has underperformed the market on new-product unveiling days. Positive pre-order figures would have likely sparked a bullish sentiment around the equity.
However, market experts view these short-term movements as temporary, citing the improvements in iPhone 16 as a critical driver for remaining bullish for the future. Analysts at Jefferies shared this sentiment and observed that iPhone 16 Pro Max models sold out quickly in China despite the slow pre-orders, pointing to a stable supply chain.
Banking giant Morgan Stanley (NYSE: MS) had initially warned that the rollout of the new model would lead to poor stock performance but expected a recovery in the future based on AI integration. The analysts believe the stock will likely outperform the market in the coming months.
Other experts at the Bank of America (NYSE: BAC) maintain that the AI integration in the new devices will be a game-changer, urging investors not to react to the short-term trends around the launch.
“If Apple surprises with a compelling demo of Apple Intelligence/third party integrations or with any price increases, we could see the stock fare better than post past events,” the analysts wrote.
What next for Apple?
The outlook for increased sales is supported by the fact that the technology giant has room to improve iPhone 16 sales. The company can attract buyer enthusiasm by releasing Apple Intelligence and peak season promotions. These events will likely change demand for the iPhone 16 models and potentially influence the stock positively.
In conclusion, with buyers seemingly showing low interest in the iPhone 16 series, Apple has the potential to salvage the situation. The AI upgrades and capitalizing on the upcoming holiday season with promotions will be essential.
Meanwhile, investors need to monitor the general economic outlook and how the tech space reacts to prevailing macroeconomic conditions, such as upcoming rate cuts and chatter about the possible onset of a recession.
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