Apple‘s (AAPL 1.49%) shares have fallen 10% since mid-September. The main causes of the drop have been numerous reports that sales of its base model iPhone 14 and 14 Plus have been disappointing and a general slowdown in consumer demand in the technology market.
As the world’s most valuable company, with a market capitalization of $2.37 trillion, Apple is one of the most scrutinized companies in the world. The past two months have been no different, as analysts distinguish between the company’s September iPhone launch and the unveiling of its 2022 iPad lineup in mid-October.
Understanding the strategy behind recently announced Apple products can be a great way to predict how far your investment will go. So here’s why new Apple products have been making headlines.
A confusing iPad launch
On October 18, Apple introduced its iPad 2022 refresh by introducing a newly designed base iPad and updated iPad Pro. Time will tell how consumers fare with Apple’s new tablets, but the media has been quick to criticize the devices. Bloomberg called the new iPad lineup “baffling,” while Techradar said its “software and now hardware is a mess.”
The main reason for the confusion lies in the updates to the entry-level iPads, but not the Pro versions. The base iPads received a redesign with new colors, the relocation of the front camera to the edge of landscape, and a Magic Keyboard accessory. renovated. Meanwhile, the 2022 iPad Pro models received their smallest update ever. They were upgraded to the M2 chip, making them 15% faster than their predecessors, along with other minor performance improvements.
However, the higher cost versions did not receive the same optimal camera relocation or redesigned Magic Keyboard. The Pro models didn’t even get the usual camera or screen improvements that consumers have come to expect year after year. As a result, Apple has given consumers little reason to upgrade to the 2022 iPad Pro and created confusion by omitting features from the base iPad.
Plus, despite some of the more compelling improvements to the base iPad, it hasn’t escaped criticism unscathed. The tablet underwent a significant redesign, including its charging port that went from lightning to the market-preferred USB-C. However, it’s only compatible with the 2015 Apple Pencil accessory that charges via lightning rather than the redesigned 2018 version that charges magnetically on the side of higher-tier iPads. As a result, users need to use an adapter to charge their Apple Pencil with the new base iPad.
iPhone 14 Plus is a flop
In addition to a confusing iPad lineup, Apple reportedly faced dismal demand for its iPhone 14 Plus, which hit stores on October 7. The base model of the iPhone was announced on September 7, along with two new Pro models and a standard model. size base model. Apple had high hopes for the larger iPhone 14 as it meant a shakeup in the lineup. There hasn’t been a base Plus-size model since 2017’s iPhone 8 Plus, as larger iPhones have been exclusively Pro versions.
However, the rising cost of living and a difficult price point prompted Apple to stop production of the iPhone 14 Plus on October 18 to reassess demand. According to The Information, two of the company’s suppliers are cutting production by 70% and 90%.
The iPhone 14 Plus is logically priced down the line, coming in at $899, while the smaller iPhone 14 is $799 and the Pro models are $999 and $1099, respectively. However, looking Verizon plans, the 14 Plus is priced at $24.99/month, while the 14 Pro Max is $30.55/month and the 13 Pro Max is $10/month. Given that many Americans are likely to get their new iPhones through a carrier plan, there’s little reason to get the Plus.
Consumers who want the biggest iPhone can get the 14 Pro Max with all the new features for an additional $5.56 per month, or those with older phones can get the 13 Pro Max, which is 60% cheaper than the 14 Plus and it has more functions.
Should you buy Apple stock?
Troubled iPhone sales are concerning, as popular devices have accounted for 40% to 70% of Apple’s revenue over the past decade. In fact, its iPhone sales represented 49% of Apple’s reported revenue for the most recent quarter of 2022.
With these details in mind, it is certainly possible that the technology company it may be heading for a weak room. Still, Apple likely won’t be idle for long. After all, Apple is home to some of the most innovative and popular products in the world. This unique strength helped boost Apple stock by 270% over the last five years, despite the pandemic and reduced demand for iPhones in 2022.
The company reported $20.79 billion in free cash flow in its most recent quarter, suggesting it is fully equipped to ride out a year of weak iPhone sales. Ultimately, Apple stock remains an excellent long-term investment.
dani cook has no position in any of the mentioned stocks. The Motley Fool has positions and recommends Apple. The Motley Fool recommends Verizon Communications and recommends the following options: $120 March 2023 Long Calls at Apple and $130 March 2023 Short Calls at Apple. The Motley Fool has a disclosure policy.