Apple Shares Slide 2% as Sluggish iPhone 16 Sales Spark Investor Concerns
2min read Apple's launch of the iPhone 16 series has gotten off to a slower start than anticipated, with pre-order sales estimated to have reached about 37 million units during the first weekend. This marks a 12.7% decline year-over-year (YoY) compared to last year’s iPhone 15 first-weekend sales. The key culprit behind this drop is the lower-than-expected demand for the iPhone 16 Pro models. According to noted Apple analyst Ming-Chi Kuo, demand for the iPhone 16 Pro and iPhone 16 Pro Max has been underwhelming, with pre-orders for these models down 27% and 16%, respectively, versus their predecessors. This tepid response comes despite Apple's efforts to enhance the Pro models with features like the tetraprism camera, as consumers appear less eager to upgrade than last year.
A significant factor behind the sluggish Pro model sales is the absence of the highly anticipated Apple Intelligence feature, which was expected to be a major selling point for the iPhone 16 Pro series. Apple Intelligence will not be available at launch but is set to roll out with iOS 18.1 in October, leaving early adopters without the feature at release. This delay may have deterred some potential buyers, especially given the intense competition Apple faces in key markets like China. In China, where the smartphone market remains highly competitive, the difference in demand between the iPhone 16 base models and Pro models has been less pronounced than in other regions, indicating broader challenges for Apple in the region.
While the iPhone 16 Pro models have faced demand challenges, the standard iPhone 16 and iPhone 16 Plus have performed relatively well. Their first-weekend pre-orders have surpassed the iPhone 15 and iPhone 15 Plus, suggesting that the more affordable models are resonating with consumers. However, the overall impact of these sales is limited, as the Pro models typically account for a larger portion of Apple's iPhone revenue due to their higher price points and profit margins. This shift in demand could have implications for Apple’s product mix and profitability going forward.
Kuo's analysis indicates that despite the slower start, Apple’s production plans are unlikely to shift in the near term. The supply chain is expected to maintain its output for the iPhone 16 series, particularly for the Pro Max model, which has seen strong production growth due to improvements in the tetraprism camera yields. Apple still has several opportunities to drive demand, including the release of Apple Intelligence in Q4 and promotional events like the year-end holiday season in the U.S. and Europe, as well as the Double 11 shopping festival in China. These upcoming events could help boost sales and mitigate the impact of the slow start.
Nonetheless, the underwhelming early performance of the iPhone 16 Pro series raises questions about Apple’s strategy. The pricing for the iPhone 16 series has remained steady, and while the tetraprism camera was a notable addition, it appears that these changes have not been enough to entice early adopters. If the combination of Apple Intelligence and promotional campaigns fails to significantly boost sales later in the year, Apple may need to adopt a more aggressive product strategy in 2025 to regain market momentum.
On the stock front, AAPL shares are down 2% in early trade, reflecting investor concerns about the slower-than-expected sales. The stock is now approaching last week’s low of $216, a critical support level. If AAPL fails to hold this level, further downside pressure could emerge, with the August low of $196 potentially coming into play. This pullback is also set to act as a drag on broader indices, given Apple’s heavyweight status in the market.
Investors will be closely watching how sales progress as Apple navigates these early challenges with the iPhone 16 launch. Much will hinge on the reception of the upcoming Apple Intelligence features and the effectiveness of Apple's promotional efforts during peak shopping seasons. With competition heating up, particularly in China, Apple may face a more turbulent road ahead in maintaining its market dominance.