Apple (NASDAQ:AAPL) shares dropped 2.6% on Monday after a $115.98 close. Since the company held its delayed iPhone 12 event on Oct. 13, AAPL stock has slid 6.8% — despite the fact the company delivered on virtually everything that had been expected. At this point, Apple is trading at mid-August levels. It’s struggling to recover to its $134.18 close just before the September tech stock selloff. Does this lackluster performance make an investment in Apple now a smart move? Or, are we at the point where the shine is off the $2 trillion company?
Apple’s stock earns an ‘A’ rating in Portfolio Grader and remains a strong pick for long-term growth. As for the shorter term, information is beginning to emerge about iPhone 12 sales. And I think what’s being reported is going to give Apple shares the boost they need to get back into growth territory.
Report Says iPhone 12 Demand Is Higher Than Expected
Apple stopped breaking out iPhone unit sales last year, and that means the company has been mum on iPhone 12 pre-order numbers. However, analysts with web analytics can get a pretty good picture of what’s happening. And the news is good for Apple.
Ming-Chi Kuo of TF International Securities tracked iPhone 12 pre-order sales, which kicked off last Friday. In the first 24 hours, Kuo says Apple sold up to 2 million iPhone 12 units. In comparison, last year the company reportedly sold 800,000 iPhone 11 units in that same initial 24 hours of pre-orders.
Strong demand during pre-orders don’t necessarily translate to equally strong sales when the new iPhones are available in stores. However, the early data is encouraging.
A Favorable Product Mix
Another positive surprise from the pre-order data is the product mix being snapped up by consumers.
Apple released four different iPhone 12 models: the $699 iPhone mini, the $799 iPhone 12, the $999 iPhone 12 Pro and the $1,099 iPhone Pro Max. This pre-order covered only the iPhone 12 and iPhone 12 Pro (the two other models will be available in several weeks). It was expected that the cheaper iPhone 12 would be the more popular of the two. Last year, the iPhone 11 was outselling the iPhone 11 Pro models by a three-to-one margin after launch.
However, Ming-Chi Kuo says this year is different. His numbers show the iPhone 12 and iPhone 12 Pro being equally popular: “The iPhone 12 Pro pre-order beat our expectation because of Apple core fans’ initial preference for high-end models, the strong demand in the Chinese market, and the coming peak season demand in the US and Europe.”
According to Kuo, the Chinese market is also going to have a big role to play in iPhone mini sales. He has revised his estimates of iPhone 12 mini sales down to 10-15% of units (from 20-25% of units) based on weaker demand for a small-screen device in China. An iPhone 12 sales mix that favors the larger — and more expensive — models is good news for Apple’s iPhone revenue numbers. Given the importance of that iPhone revenue in driving AAPL stock growth, this is a very good trend for Apple shareholders as well.
Look Beyond the iPhone
This goes without saying, but smart Apple investors are looking beyond the iPhone for long-term growth. Yes, the iPhone still accounts for the lion’s share of Apple revenue. But as CEO Tim Cook pointed out when the company reported its latest quarterly earnings, the company is seeing double-digit growth in Services revenue. In addition to the iPhone and Services like Apple TV+ and Apple Music, there is also the iPad, the Mac, the Apple Watch, AirPods, the Apple TV, HomePod smart speakers, Beats headphones and a flourishing accessory business.
And the company is working on everything from self-driving car technology to AR glasses. The next must-have Apple product could emerge from Cupertino at any time.
Bottom Line on AAPL Stock
The preliminary iPhone 12 pre-order numbers are unofficial and unconfirmed by Apple. And 24 hours of pre-orders doesn’t mean the trends are going to translate to in-store sales. Still, the likelihood of the 5G iPhone 12 kicking off an upgrade super-cycle that could see up to 30% of current iPhone owners upgrade seems more likely than ever.
If that happens, the current dip in AAPL stock is going to look like a huge buying opportunity in hindsight. Even if iPhone 12 sales are just okay, this company has so many ways to win that long-term growth is all but assured.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.