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Apple Stock: The Best Holiday Season Ever For The iPhone?

While a few have been cautious about Apple’s performance in a post-pandemic environment, one analyst has come out with a bold prediction for iPhone sales in the holiday quarter.

So much for caution. On November 16, Wedbush’s Dan Ives published a report in which he reinforced his optimism for the iPhone 13. According to the analyst, Apple is on track to sell 40 million devices during the 2021 season, and 80 million in total in fiscal Q1 (October through December).

Today, I grab my calculator and try to estimate the impact that such a strong season of sales might have on Apple’s P&L – and, why not, on Apple stock  (AAPL) - Get Apple Inc. Report as well.

Hand holding Apple's iPhone, blank background.

Figure 1: iPhone 13 mini model.

(Read more from the Apple Maven: Apple Stock: Metaverse Opportunity Is Unfolding)

iPhone 13: doing the math

According to Mr. Ives, 40 million iPhones sold between Black Friday and Christmas would be a “record holiday pace for the company despite the lingering chip shortage limiting iPhone supply globally by roughly 10 million units.” This piece of information contrasts with a handful of opinions that iPhone 13 sales would likely disappoint in the new fiscal year, following the end of the pandemic.

According to Consumer Intelligence Research Partners, the ASP (average selling price) of the iPhone in the 2020 holiday quarter was $873, nearly $65 higher YOY. I find it reasonable to assume that this figure could increase by some $25 to around $900 in fiscal Q1 of this year, as the higher-end models continue to be the most sought-after in Apple’s smartphone lineup.

Should Wedbush be right in its estimate, 80 million units at a blended ASP of $900 would represent roughly $72 billion in iPhone revenues. This would be an increase of 10% over last year’s number, which in turn had already been a record quarter of iPhone sales. See chart below.

Figure 2: iPhone quarterly revenues since fiscal 2018 (in MM).

Figure 2: iPhone quarterly revenues since fiscal 2018 (in MM).

How may AAPL stock react?

The harder question to answer is: should Apple in fact sell 80 million iPhone units in the holiday quarter, how will Apple stock behave? Here, qualitative analysis might make most sense.

iPhone revenues of $72 billion, if achieved, would likely be well ahead of analysts’ consensus expectations. After Apple’s executive team warned of $6 billion in lost revenues due to supply chain issues, I bet that Wall Street will set the bar conservatively ahead of the January 2022 earnings week. This being the case, AAPL shares would probably find support from strong performance relative to expectations.

Twitter speaks

Looking beyond the short-term results, I have recently asked Twitter users if Apple will be a key player in the metaverse – a more immersive online experience enabled by virtual and augmented reality. Below are the responses.

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)