Analyst: iPhone XS Max sold out over weekend, XS orders ‘very weak’

Rosenblatt’s Jun Zhang sees iPhone XS inventory piling up, expects sharp production cuts.

From a note to clients that landed on my desktop Monday:

Our channel checks indicate iPhone XS and iPhone XS Max weekend sales are higher than iPhone X weekend sales. We believe this is mainly due to a better production ramp for the iPhone XS and iPhone XS Max. However, our research suggests the iPhone XS order pipeline is very weak, resulting in leftover inventory of the iPhone XS. We continue to believe total iPhone XS and iPhone XS Max sales will be lower than total iPhone X sales over a two-month period…

Overall, we believe iPhone XS and iPhone XS Max weekend sales were weak. Based on retail sales data and our estimates of production, we estimate a combined total of ~7 million units sold over the weekend. Our research suggests the iPhone XS max sold out over the weekend, while the iPhone XS still had some inventory left in various retail channels. We believe iPhone XS Max sales were about 4-5x iPhone XS sales over the weekend.

Both the iPhone XS and iPhone XS Max 64G are available for immediate shipment, while the iPhone XS Max 512G has a shipment wait time. Apple’s ASP and gross margin should benefit from the quick sellout of the iPhone XS Max 512G.

Based on recent iPhone XS and iPhone XS Max data, we believe iPhone XS production for the second half of 2018 will be cut from 15 million units to 10 million units. iPhone XS Max sales are steady, but we will have a clearer picture on sales when the iPhone XR is released.

Maintains Buy rating and $200 price target. 

My take: Other analysts have suggested the same—iPhone XS Max sales strong, XS sales weak, wait for the XR—but not with the same sense of Apple doom. How Zhang can maintain a buy rating if he thinks the stock is going down is still a mystery to me.

9 Comments

  1. Patrick Beyrouti said:

    GREAT for ASP !!!!!

    2
    September 24, 2018
  2. John Kirk said:

    I prefer to wait for the actual numbers, but if we’re speculating, what seems to be happening is that power users are going for the X S Max, “regular folk” are waiting for the X S R and the iPhone X S is the odd man out.

    We’ll see.

    0
    September 24, 2018
  3. Fred Stein said:

    A bit smug here, having touted the attraction of the XS Max, especially to young males mainly due to best-in-class video and gaming experience – more pixels and better sound.. With falling SSD prices, they’re margin monsters.

    The Max has some Veblen effect, being the best in class.

    The XS competes not only with the up-coming XR (lacks telephoto), but also with used models of the iPhone X. Gazelle offers a 64G iPhone X for $769.That’s a powerful phone with telephoto, and with well over 2 years of service life left on it.

    1
    September 24, 2018
  4. Fred Stein said:

    Just observing: Zhang’s $200 target is 10% below peers; And he see weaker combined XS and XS Max sales vs X last year. Maybe he is wrong on both.

    1
    September 24, 2018
    • Gregg Thurman said:

      Believing Zhang is the same thing as trusting him to manage your money. Does anybody here trust Zhang to manage their money? I don’t and would never recommend him to others.

      Come to think of it ther are only two Apple analysts I would recommend (out of 40 that follow Apple), #1 Brian White and #2 Gene Munster.

      0
      September 24, 2018
  5. Kathy Corby said:

    FWIW, I am standing in the downtown Philadelphia Apple Store, which is more full than I have ever seen it. More full than on launch day mornings. The guy who checked me and said “Yeah, it’s crazy. We’re starting to form lines outside again. It’s just been getting busier and busier “

    0
    September 24, 2018
  6. Ken Cheng said:

    If you parse any analysts’ words very carefully, they use alot of soft, imprecise words with very few data points. It’s all hunches and guesses and extrapolations of extrapolations. Not a very solid foundation, and nothing to get all worked up about.

    1
    September 24, 2018

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