September 11, 2013, 3:22 PM — Are Apple Stock Analysts Clueless?
Apple's stock was downgraded today by a number of analysts, and the stock plunged by around 5%. I really have to wonder about some of these analysts. Why are they so clueless about how Apple runs its business?
Wall Street’s initial reviews on Apple Inc.'s new iPhones and the company’s pricing strategy are far from favorable.
At least three strategists downgraded their investment ratings on Apple Wednesday morning in the aftermath of the company’s latest product launch. Shares fell as much as 6% to $464.81 minutes after the opening bell. Through Tuesday’s close, the stock had been up 25% since the end of June. Still, it remains a far cry from its record high above $700 in September.
Anybody who expected the iPhone 5C to be some sort of low-end, cheap iPhone doesn't understand that Apple is an aspirational brand and company. Nor do they understand the marketing potential of offering the iPhone 5C in five new colors. The younger crowd will probably find it very attractive.
The analysts also don't seem to understand the importance of the 64-bit processor in the iPhone 5S, and how that will affect the future of the company (more on that below). It may even end up being used in a future Apple TV to bring high quality games to the living room, and increase sales of the Apple TV. And who knows if it or a successor to it might end up in an actual Apple television set someday?
But all of this somehow escapes the analysts. My guess is that Apple will sell more iPhone 5Cs (along with lots of iPhone 5S phones) than any iPhone in history. And the analysts will have egg on their faces once again.
Some of these analysts should read the column about why Apple doesn't need a cheaper iPhone over on Business Insider. It sums up very well why Apple didn't come out with a crappy iPhone to "increase market share."
When you get down to it: the only argument in favor of a cheaper phone is market share.
Apple has been totally clear that it does not care about market share. Most people chose not to believe Apple. Starting today, that should change.