Apple (AAPL) -) shares extended their recent slump Tuesday ahead of the tech giant's highly anticipated product-launch event, expected to unveil the next generation of its iconic iPhones.
Today's launch event, dubbed "Wonderlust," will kick off at 1 p.m. Eastern Time at Apple's campus in Cupertino, Calif. It's expected to include a series of updates across Apple's product suite, with the grand unveiling of the iPhone 15 from Chief Executive Tim Cook.
Apple traditionally unveils its new lineup in September, hoping to capitalize on its marketing expertise by building consumer hype into the holiday season.
That task may prove more difficult this year, however, as U.S. buyers face a host of issues that are likely to tame retail spending over the coming months, while markets overseas – particularly in China – suffer from weak domestic economies and upstart smartphone rivals.
Reports also suggest Apple is looking at significant price increases for the new iPhone 15 handsets, with the top-end Pro Max rising $200 from its previous version to $1,299.
"We believe now is the time to increase iPhone prices modestly, as while Apple will keep the base-model prices unchanged, the enhanced technology, chips, and battery technology in iPhone 15 Pro/Max warrants this strategic pricing move from Apple," said Wedbush analyst Dan Ives. He carries an overweight rating and a $230 price target on Apple stock.
"Importantly, we expect some massive discounts/promotions from U.S. carriers over the coming months, which should further catalyze iPhone 15 sales out of the gates and take the sting of a slight price increase away." he added.
Apple shares were marked 1.35% lower in mid-morning trading and changing hands at $176.92 each, pegging the stock's one-month decline at around 1.5%. For the year, Apple shares are still up more than 41%, more than double the advance of the S&P 500.
Apple faces stiff near-term challenges
Apple's near-term challenges remain stiff, however, with reports that Beijing is implementing a broader crackdown on iPhone usage by government employees. That came just days after the launch of China-based tech group Huawei's new handset, the Mate 60, which could pressure Apple's China sales. China is Apple's second-most important market.
In addition, a cautious forecast for consumer demand from rivals such as Samsung Electronics and its key supply-chain ally, Foxconn, suggests a difficult backdrop heading into the "Wonderlust" launch and the crucial holiday period for the world's most-valuable tech company.
Meanwhile, discretionary spending n the U.S. is starting to fade. And a moratorium on student-loan payments has been lifted, which is forecast to take around $100 billion from overall consumer spending in the U.S. each year, according to Oxford Economics.
"We fear the U.S. upgrade cycle is coming to a halt; upgrade rates are at all-time lows and likely to result in weak Americas revenue," said KeyBanc Capital Markets analyst Brandon Nispel in an August client note.
Citigroup analysts noted that since 2016, Apple stock has outperformed the S&P 500 by around 8% between the release of its third-quarter earnings and the September launch of its new iPhone model.
The stock is down nearly 7% from its Aug. 3 earnings update, reflecting Apple's significant near-term challenges.
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