Can The Record IPhone 6S Sales Drive Apple Stock Higher?

  • Apple announced that it has sold more than 13 million iPhone 6S/iPhone 6S Plus handsets just three days after their sales launch.
  • New features such as Live Photos and 3D Touch are acting as a big draw.
  • This marks a new record for the company and helps to alleviate investor fears about a possible slow down in iPhone sales.

Apple (NASDAQ:AAPL) reported that it has sold more than 13 million iPhone 6S/iPhone 6S plus handsets just three days after the sales launch of the new models, a new record for the company. It appears as if iPhone 6S’ bells and whistles such as Multi-Touch interface with 3D touch and Live Photos are acting as a big draw for the phone, and dispelling the notion by some analysts that they are not substantive enough to make people want to upgrade. Live Photos brings still images to life. Meanwhile, the pressure-sensitive screen actually opens up a whole new vista of things that Apple developers can do with the smartphone. Live Photos, 3D Touch and the 12 Megapixel iSight camera are all powered by A9 chips, the most advanced chips in a smartphone.

But what does all this mean for Apple stock? As highlighted in an earlier post, Strong iPhone 6S sales could have a material impact on Apple stock price.

Good gains on the horizon

The investing world reacts quite strangely to new Apple products. Whereas stocks of most companies usually make good gains when they announce new products, Apple stock usually sells off by quite a margin whenever the company unveils new products. This probably has something to do with Apple’s secrecy about new products, and super-high expectations surrounding the company. Apple shares have followed the old script and have slipped after the two phone models were unveiled.

Apple 5-Day Share Return


Source: CNN Money

Apple shares, however, tend to perform better 6-12 months after the launch of new products.

Apple Share Performance After Launch of New iPhones

Apple Comeback-4

Apple relies heavily on iPhone sales to drive its top line. The investing world watches hawk-eyed for any signs of trouble in this segment, which can sometimes lead to high short interest in Apple stock. With the good piece of news out, Apple investors can now rest easy.

What about Apple Watch?

One of the major reasons why Apple shares sold off badly post Q3 earnings call was because the company failed to break out Apple Watch sales numbers leading many investors to fear the devices were not selling as well as anticipated. There are a number of reports that keep surfacing on the Internet that suggest that Apple Watch sales are not great. A recent story about an Apple Watch parts supplier suggests that sales are still sluggish. But it’s hard to arrive at conclusions based on just one supplier since Apple sources its parts from many different suppliers.

Apple recently announced that the Apple Watch will be available at 100 Best Buy stores in the U.S. starting August and another 300 locations before the holiday season. This marks the first time that the product will be available outside Apple retail stores. Apple retail stores typically have huge amounts of traffic which can discourage a lot of potential buyers of Apple products from shopping there. Meanwhile, while many investors have for long regarded Best Buy as the place where new products go to die, this seems to be changing. DJI, maker of the highly popular Phantom 3 consumer drone, has lately been seeing its drones selling out in nearly all Best Buy stores, which suggests that Apple picked the right retailer for Apple Watch.

Many analysts estimate that the product sold between 2-3 million units during last quarter, which puts it a shade below Fitbit Inc (NYSE:FIT) sales of 3.5 million units. That’s quite remarkable for a newly launched product. Making the product available outside Apple retail stores might have a big impact on sales and allow Apple to finally report its sales as a separate category and thus help quell investor fears.

Brian Wu Brian Wu   on Amigobulls :
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