Wedbush: 10%-15% chance Apple’s 5G iPhone lands on time

Depressed sales and a delayed launch are already priced into Apple’s stock, says analyst Daniel Ives.

From a note to clients that landed on my desktop Wednesday evening:

With iPhone 12 and the highly anticipated 5G models on the horizon slated for a September launch, instead Cupertino finds itself staring at a major quagmire whether to launch the phones this Fall. As we have discussed often with investors over the last week we believe the chances for a launch in the September/October timeframe is “extremely unlikely” and would assign a 10%-15% probability it happens given the lingering supply chain issues that remain across Asia (Malaysia suppliers just halted production due to COVID-19) coupled by a global pandemic that has consumers worried about their health, groceries, jobs, and hand sanitizer over buying a new iPhone.

Taking a step back, having one of its most important iPhone launches in its history into a consumer environment still recovering from the impact of this unprecedented COVID-19 dark storm would be a risky decision that likely gets shelved until holiday season in our opinion. Apple has one shot at its first 5G launch and tepid success out of the gates due to a lukewarm consumer appetite would be a disaster scenario that further plays into the mindset of Cook & Co. as they ponder the potential timing of this flagship product rollout…

In a nutshell, Apple’s stock now is pricing in depressed iPhone units, a 5G launch getting delayed, and supply chain not normalizing till the May/June timeframe. We believe iPhone 12 now likely launches around the holiday timeframe in a more normalized consumer environment with “springboard-like demand” momentum heading into FY21.

Maintains Outperform rating and $335 price target.

My take:  Considering the enthusiasm with which Ives has has been singing the 5G super cycle song, you’d think any delay would be a big deal for him.

See the Apple 3.0 Daniel Ives archives

6 Comments

  1. Gregg Thurman said:

    I can see Apple delaying the launch a month (to November?) to allow more recovery time for consumers, but not the start of production (August?).

    Instead of consumers having to wait two, three or four weeks for their order to ship, it ships almost immediately. Ergo Apple ships the same number of units in November/December that they would have normally shipped in October/November/December). And so what if some of that demand spills over into the March quarter? It wouldn’t be the first time that has happened. Besides the more distance between the lockdown and the consumer has to recover the stronger demand will be in months that are historically weak.

    The important metric isn’t how many widgets are sold in the December quarter (FQ1/2021), it is how many widgets were sold in FY2021.

    Just a thought. If anyone could pull this off it would be Apple.

    2
    March 25, 2020
  2. Gregg Thurman said:

    Nikkei Asian Review, potentially accurate, but never truthful.

    0
    March 25, 2020
  3. Jerry Doyle said:

    While Apple is concern legitimately that customers may be reticent to purchase the next generation new and innovative technology while the economy is recovering from the negative effects from the coronavirus, I see things differently. Consumers will be ready to move actively back into their daily activities of living. I believe there will be pent-up consumer demand to uplift individual spirits and Americans always have shown one way to do that is to buy themselves something that makes them feel good.

    Consumer jobs will be waiting for them. All indications are that the economy will ramp up quickly and come roaring back. There is so much liquidity that will be in the economic system sloshing around now; like several trillion dollars!

    If supply constraints limit the company’s ability to manufacture production to meet full demand, I say that most consumers will wait on back orders. Tesla is a prime example of consumers with pent-up demand willing to wait on “backorders,” and that is a product of humongous importance more to most individuals than a smartphone.

    Apple can have supplies of phones ready for the holiday period while continuing to roll out more in the subsequent weeks and months afterwards.

    Consumers will wait patiently, knowing that their name is on the list and that their phone is coming.

    0
    March 25, 2020
  4. John Butt said:

    In lockdown here in NZ I am surprised by the level of purchases (anecdotal) due to schools in lockdown insisting on remote working over tablets

    Demand for some products could be surprising

    1
    March 25, 2020
  5. Fred Stein said:

    5G iPhones in C Q4 2020? It doesn’t matter

    1
    March 25, 2020
  6. Gregg Thurman said:

    Gene Munster thinks the probability of shipping on time is much higher, my attitude is that it doesn’t matter.

    Any inability to ship in the December quarter (demand or supply) will be shifted to subsequent quarters with total FY sales exceeding FY2018 and FY2019.

    0
    March 26, 2020

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