Apple's shares slide on analyst downgrade that the iPhone is now 'facing the reality'

Apple's shares slide on analyst downgrade that the iPhone is now 'facing the reality'
HSBC analysts have changed their Apple stock recommendation to "hold" from "buy," reports CNBC, sending Apple's stock in another tailspin. Prior to the cut, the shares had lost about 18% of their value for this quarter alone, and added a further 1.7% decline after the downgrade. HSBC revised its stock price target down to $200, and issued the following memo to their clients:



People may simply be sniffing at the new iPhones which are a huge departure from their predecessors in terms of size and design. Apple may also not be immune to the larger phone market's saturation, as people are holding onto their perfectly good handsets for longer.

It is combating the slump with higher prices to keep revenue in check but that could be leaning on potential demand as people are hitting the threshold of what they would pay for a new handset, be it with Apple's logo on the back.

Faced with softer sales than analysts expected, Apple is introducing stealth iPhone promos that aren't very typical for the company. It all began in October when approximately a month had passed into the iPhone XS and XS Max sales, and right before the iPhone XR was scheduled to be released to carriers and stores.

Apple apparently moved some of the marketing team around, according to insiders who spoke to Bloomberg, tasking them with overcoming what already appeared to be tepid sales compared to the expectations. The mid-flight marketing strategy change was assembled in a "fire drill" manner, as Apple's tactic to release the XR later than the more expensive XS and XS Max was seemingly backfiring. Apple, however, couldn't be sure if this is because people were holding out for the XR, or simply the upgrade demand for newer iPhones has been overestimated, so they took no chances and changed marketing tack.

The result? A few iPhone promos and discounts in all but a name that isn't at all what we are accustomed to seeing from Apple since carrier subsidies went bust. The most notable one is the temporary raising of trade-in prices for older iPhones, netting you $200 for an iPhone 6s instead of $100.

Not only that but if you now go to Apple.com, you will see one very unusual banner that says you can get the iPhone XR "from $449," with an asterisk denoting that this is a trade-in offer. 

Apple's shares slide on analyst downgrade that the iPhone is now 'facing the reality'

We shouldn't make a mountain out of a molehill, as this same banner is only on Apple's America website, not in Europe, or, say, Japan (we checked), but it is a pretty loud confirmation of Apple's aforementioned new marketing approach towards iPhone sales. 

In addition, yesterday the phone maker launched a dedicated section on its website where it offers its products at a discount for active duty military and veterans, starting the iPhone 7 from $404. We'll see if the "limited time" trade-in offer is only meant or boosting the all-important holiday sales, or will become a more permanent fixture for clearing up inventory.

Related phones

iPhone XR
  • Display 6.1" 828 x 1792 pixels
  • Camera 12 MP / 7 MP front
  • Processor Apple A12 Bionic, Hexa-core, 2490 MHz
  • Storage 256 GB
  • Battery 2942 mAh(25h talk time)

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33 Comments

1. someguy2261

Posts: 247; Member since: Feb 12, 2016

Haha told told so. And way down we go go go ,,, you forget to mention problems with this bubble economy. And that the bubble has been pricked and the air is about come out. I hoped that you took my advice and sold you shares a 220 . Like I said apple is going to be at huge discount.

3. midan

Posts: 2576; Member since: Oct 09, 2017

Apple shares will go up right away when these analysts comes back to reality from their unrealistic expectations which they have had a long time, propably after holiday q results when Apple shows everyone that there's nothing to worry. You need to look the whole markets and how it does and then compare it to how Apple does.

33. Atechguy0

Posts: 918; Member since: Aug 03, 2018

The trade in vales to get an iPhone XR are a joke. Trading in a iPhone 6S plus and the user still has to pay $500 to get the iPhone XR is a complete joke. Only a sucker would think that is a great deal. But then again, I believe this is Apples sales motto 'A sucker is born every minute''.

5. Dr.Phil

Posts: 2293; Member since: Feb 14, 2011

It does make me wonder if at Apple's event next spring when they normally announce the new base iPad if they will introduce another iPhone SE type device to bring in more sales. Remember, even when it comes to iPads, people are by and large purchasing the cheaper regular iPad at $330 instead of the more expensive Pro. I think it would be quite dumb of Apple to continue on as if business is usual by just providing these iPhones that cost more than the average consumer wants to spend.

6. midan

Posts: 2576; Member since: Oct 09, 2017

"I think it would be quite dumb of Apple to continue on as if business is usual by just providing these iPhones that cost more than the average consumer wants to spend." That's why Apple have many iPhones in many price points so everyone can choose which suits best for their wallets.

11. Dr.Phil

Posts: 2293; Member since: Feb 14, 2011

Tell that to the folks in India where Apple is struggling to compete in sales. Indian customers are looking for lower priced options from Android instead of Apple. Same can be said of China.

7. BLUEBLASTER

Posts: 913; Member since: Feb 23, 2014

Surely not. 4 New iPhones along with the 8, 8 Plus and X ( I know the X is no longer on sale but you can still get one from many carriers) That would be too much.

8. Dr.Phil

Posts: 2293; Member since: Feb 14, 2011

There is only 3 new iPhones, not 4 iPhones. The iPhone XR, XS, and XS Max. And considering the prices for the new iPhones start at $750 and above, there is definitely room for a lower budget option. And a lot of people are most likely not going to purchase an iPhone 7 or 7 Plus directly from Apple, which is a loss on their part because they don't get to reap the benefits of those second hand sales.

9. Leo_MC

Posts: 6637; Member since: Dec 02, 2011

The analysts estimations are for speculative stock; you find more about a company, looking at the behavior of major stock owners.

10. someguy2261

Posts: 247; Member since: Feb 12, 2016

The analyst are permbulls , they told to buy at 220 ,buy 190 , now 177 buy . Stock are not only you have look a whole market and the economy. This why I said phonearena has no clue calling more upside at 220 . The bubble has been pricked. People are going to lose a lot of wealth.

17. LouisMariano5

Posts: 61; Member since: Sep 22, 2014

the company is greedy... i hope they lose business..... and i hope samsung learns from this and doesn't charge a gazillion dollars for their upcoming S10's

19. domfonusr

Posts: 1070; Member since: Jan 17, 2014

Last I checked, there were over seven billion people on the Earth. If Apple focuses on selling iPhones, iPads, and Macs (and all their accessories) to just the top income earners of the world, say the top 0.1%, then they will be able to cut production costs and staff because they will not be producing nearly as many units for sale, and reinvest some of the cost-cutting into things that help them focus on luxury and exclusivity (gold-plating, diamond-encrusting, leather-trimming, services, etc.), and then sell just seven million units at an ASP of $50,000 a pop, they will have a revenue of $350 billion a year, a lot of which will pour straight into profits in the end. That is all that Apple really has to do... they hardly have to change anything else. Hardly any of us will be able to afford Apple products after that, if that is the way that Apple decides to go. That is why I am looking to experience the fruit phone and Mac mini sooner rather than later, if I can manage it... otherwise, I will miss any chance that I have left. Chances are I will not be able to afford to buy such things a second time.

20. Rigmaster

Posts: 234; Member since: Jan 22, 2018

Apple's only reality is this year's models are grossly over-priced. Add to that, the cheapness of not including fast-charging peripherals and no split-screen for these "larger" phones, and people just decided to hold off. Upgrading for most means upgrading. This time Apple just made it hard to actually feel like the upgrade was anything useful at all. Camera is not enough - people take quick and decent photos 99% of the time - not cimematic masterpieces. iPhones will evolve and be less about the hardware and more about them as a piece of a delivery chain. Some have already forecast Apple Health will emerge as the new service-based key, and that wouldn't surprise me at all. Imagine that Apple the software and services company? Sound familiar? Remember the death of Microsoft calls throughout the '90s? Apple's going to have to decide whether to accept the market reaction for what it is. If '19 models cost more, then Apple's in big trouble. Samsung and all the others found out the exact same thing. Oh, and 5G - big to do about something that benefits connected devices more than smartphone users.

24. foldablephone

Posts: 56; Member since: Sep 19, 2018

I got my iPhone 7 128GB (Product Red) Black Friday 2017 for £399 and I’m gonna hold on to it for years thanks Apple. It’s fast, not too big and new cases are dirt cheap. The XR doesn’t have my 3D Touch (which I use) plus the XR screen replacements are insane at £200 for a replacement. Also UK customers aren’t getting the new trade in prices. Apple should go back to one single iPhone (best version) with maybe the standard and bigger size the only difference . I think customer are confused by the 3 different models which are all too expensive. Customers used to know if they got the new iPhone they had the best iPhone but that’s no longer the case (The 5c suffered the same issues too).

27. davidvilla25

Posts: 31; Member since: Nov 28, 2018

I see apples are still the big man of the world

29. worldpeace

Posts: 3099; Member since: Apr 15, 2016

No worries, on next update they'll throttle/brick the iPhone7 and older phone, and offer trade-in for iPhone XR.

31. whatev

Posts: 2129; Member since: Oct 28, 2015

You should trade in your brain, it looks throttled

* Some comments have been hidden, because they don't meet the discussions rules.

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