After the mega launch event, what’s in store for Apple (AAPL)

After last week’s eagerly awaited launch event, Apple Inc. (NASDAQ: AAPL) has been getting positive reviews from market watchers. The optimism can be linked to the stable demand for iPhone over the years and the good initial response to the latest version of the smartphone, which is probably the most popular electronic gadget. The strong pre-booking trends point to a recovery from the recent slowdown in sales.

Apple’s stock got a much-needed boost after the product launch, marking its best performance since suffering a selloff early this month. Then, investor sentiment was hit by China’s plan to extend the ban on the use of iPhones to government offices and state agencies. The setback came about a month after the stock hit an all-time high. While the stock recouped a part of the lost strength, the selloff had a cascading effect on other tech stocks like Tesla and Meta Platforms.

High Demand

Initial reports indicate that the rate of pre-booking for the newly launched iPhone models has surpassed the previous versions, which is good news for Apple considering the recent sales slowdown. However, muted consumer spending and economic uncertainties could weigh on sales in the near future, denting the company’s prospects in the final months of the fiscal year. Restrictions in China, which is an important market for the company, will be a drag on revenues. Also, there are concerns that relying too much on the iPhone for revenue generation makes Apple vulnerable to stagnation in the long term.

At the launch event, the company unveiled the iPhone 15 and iPhone 15 Plus, as well as the premium versions — iPhone 15 Pro and Pro Max. Another highlight of the event was the introduction of the brand-new Apple Watch, made with titanium and with a long battery life. The tech firm also announced its updated AirPods.  More recently, the company released iOS 17 for iPhone, which is the biggest software update so far this year.

From Apple’s Q3 2023 earnings call:

“We continued to see strong results in emerging markets, driven by robust sales of iPhone with June quarter total revenue records in India, Indonesia, Mexico, the Philippines, Poland, Saudi Arabia, Turkey and the UAE. We set June quarter records in a number of other countries as well, including France, the Netherlands, and Austria. And, we set an all-time revenue record in Services driven by more than $1 billion paid subscriptions. We continued to face an uneven macroeconomic environment, including nearly 4 percentage points of foreign exchange headwinds.“

Financials

Apple delivered better-than-expected revenue and profit for the third quarter, as it has done in almost every quarter in the past, with only a few exceptions. However, the top line was impacted by lower iPhone sales and modesty declined year-over-year to $81.8 billion in Q3. That was partially offset by a 20% growth in Services revenue, which reached a record high as paid subscriptions crossed one billion. Earnings, on the other hand, moved up 5% to $1.26 per share.

Extending the momentum that followed the product launch, Apple’s stock ended the last trading session higher. Since January 2023, AAPL has grown about 43%.