Apple Inc. is in the news with an offer than would gladden the heart of its fans and possibly increase the sales of its devices in the new quarter. Cnet Reports that Apple is offering a $50 discount when you buy an iPhone and the Apple Watch together from selected official retail outlets in the United States. Apple doesn’t usually sell its products with promos or discounts; hence, the bear camp might want to suggest that the firm is being forced to offer discounts to trigger sales.
However, it is not as if Tim Cook is begging everybody on the street to buy its Apple Watch by giving them discounts. In fact, the limited-time promotion is available exclusively through in-store acquisition and only at selected retail outlets in the Boston and San Francisco Bay areas. More so, the high-end Apple Watch Edition model and the Apple Watch Hermès model are not incorporated in the promotion.
Apple Watch discount doesn’t signal weak sales data
The bears are hinting that the discount suggests that the firm is not selling decent units of its smartwatch. The fact that Apple has not divulged watch sales (because it does not want to offer its rivals insight from the figures) is also not helping matters. The average selling price of the Apple Watch has been set at $529, above the bearish forecasts of $450; yet, the bears are not giving up on their gloomy outlook.
To start with, Adnaan Ahmad, analyst at Hamburg’s Berenberg Bank, says that the shares of Apple will plummet to an $85, a 29% decline from today’s opening price of $120. In a note that he sent out, he says, ” Apple: ticking time bomb… is a one-product company, and this product has run out of steam or will do very soon… the Watch has been a disaster relative to lofty expectations.” Colin Gillis at BGC Partners also has a slightly bearish view on the firm as he as gives the stock a $115 price target to mark a 4.1% discount.
The Bullish case for Apple is stronger
Contrary to what Ahmad believes, Apple is not a one-product firm, and Watch has been a success in its own right. CEO Tim Cook notes that opening sales of the Watch has beaten the sales record of the first iPad and iPhone when they were first launched to the market. More so, the average unit sales of the device in the first quarter of its release confirms Cook’s statement as estimates range from 2.5M units to 6M units.
The bullish case for Apple is still very strong. For instance, analysts at Drexel Hamilton have a $200 price target on the stock and analysts at Piper Jaffray have a $179 price target on the stock. In fact, about 38 analysts have price targets exceeding $120 on Apple and only the two analysts mentioned earlier had price targets below it’s current trading price.
The crowd is not always right, but the fact that Wall Street is massively bullish on Apple and the fact that the few bears have dismal arguments suggests that the firm is still far from getting a bear hug.