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Apple’s iPhone Shipments Could Drive Stock Price in 2019

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Dec. 27 2018, Updated 5:00 p.m. ET

iPhone accounts for majority of Apple revenue

Apple’s (AAPL) iPhone is the company’s flagship product and accounted for over 60% of total revenue in fiscal 2018. Apple’s iPhone success has resulted in astonishing returns for investors over the last ten years. Excluding dividends and buybacks, Apple stock has gained a mindboggling 1,130% since 2008, the year when the iPhone was first launched.

The recent pullback in Apple stock was also primarily driven by iPhone concerns. Apple announced that it would no longer publish device sales going forward in its quarterly results, which raised investor concerns over slowing iPhone device sales. Lower supply chain estimates and a declining sales forecast for Apple suppliers have added fuel to the fire.

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Apple analyst further cut shipment estimates

Noted Apple analyst Ming-Chi Kuo has lowered iPhone shipment projections for Apple’s second quarter of fiscal 2019 (year ending in  September). Kuo expects Apple’s iPhone shipments to be between 38 million and 42 million units, which is 8 million to 12 million units lower compared to the same period in 2018.

Apple can offset declining device sales by increasing average selling prices (or ASPs). However, a 20% fall in device sales indicates market saturation, especially in developed markets.

Lower-than-expected demand for the iPhone XR has driven Kuo’s device forecast. Apple’s iPhone shipments are expected to fall between 5% and 10% year-over-year in 2019. Kuo expects iPhone shipments between 205 million and 210 million units in 2018.

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