2023-06-12 05:00:00
Apple’s stock price briefly hit a record following showing off its virtual reality headset. Is this potentially the peak of the action?
Pro Vision VR Headset
At the Worldwide Developers Conference (WWDC), Apple showed off its VR headset, its biggest product launch in 8 years, in a move that knocked $85 billion off its market value in just 40 minutes.
The headset allows users to interact with digital objects superimposed on the environment. What is the cause of this drop?
After the video presentation, investors seem to have understood that Apple is targeting enterprises and software developers as core customers rather than the mainstream retail market. It is expected that subsequent generations of products will be geared towards mainstream customers.
Second, the $3,499 price tag makes the headset more expensive than the $2,500-$3,500 price range analysts expected and nearly 12 times the price of Meta’s Quest 2, the best-selling VR headset on the market. .
Third, the headset won’t be released until next year, and even then it will only be available in the US, at least initially, which will further limit the market.
What do analysts think?
Reactions from analysts have been mixed. JP Morgan was surprised by the launch price, but won over by the richness of features. High-end build quality and comprehensive functionality might support modest initial sales volumes of 100,000 to 200,000 units in the first year.
In the minutes leading up to the headset’s launch, Apple’s stock price hit $185, up 43% year-to-date and 22% over the past 12 months.
Morgan Stanley was more cautious. On the one hand, they believe that Apple has proven that it has a vision for AR technology. However, Morgan Stanley analysts also believe that the Vision Pro is not ready for mass consumption, for lack, among other things, of a “killer app”.
Uncertainty regarding sales has had the effect of varying forecasts considerably. KGI Securities expects 200,000 deliveries in the first year. Credit Suisse, meanwhile, predicts that Apple might ship more than a million units during the same period.
However, it should be borne in mind that it is not necessary to dominate the market deliveries to become the most important player, which is the case with smartphones from Apple.
What other factors are pushing Apple higher?
In the minutes leading up to the headset’s launch, Apple’s stock price hit $185, up 43% year-to-date and 22% over the past 12 months, outperforming at the both the S&P500 and the Nasdaq100.
Apple’s rise to its all-time high is not only the result of the optimism aroused by the release of the new product, but it is also part of a recovery of the big technology companies, which has lifted the Nasdaq100 to its highest level in 14 months and the S&P500 to its highest level in 10 months.
What are the risks for Apple from now on?
While there are plenty of reasons to follow in Warren Buffet’s footsteps and buy Apple stock, there are also plenty of risks. There are also, of course, risks.
Apple’s high pricing strategy helps protect its margins. However, it might also limit sales, not only of VR, but also of the new iPhone 15. These new devices might be unaffordable for many customers, especially in a recessionary climate.
Conclusion
Apple’s stock price hit an all-time high ahead of the launch of its VR headset. However, disappointment with the high price of the product, among other things, drove the stock price down.
Apple’s rebound is part of a broader move, backed by quality research, Fed rate hike hopes and the AI engine, which may still have a bright future ahead of it. him. However, the overbought situation of the Nasdaq calls for caution.
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