One of the world’s most recognized names in technology could be paying the price for asking consumers to cough up too much. Now, even investors are encouraged to drop the brand from their stock portfolios.
Apple has long been criticized for driving smartphone prices up. Once Apple broke the $1,000 mark, other phone manufacturers soon followed. The new iPhone SE represents a return to normalcy for the brand, priced at $399. Unfortunately, that hasn’t been enough to help the company rebound.
A Budget Priced Phone Backed With Apple Design
An entry-level model isn’t entirely unusual for Apple. Apple has been releasing stripped down, cheaper models of phone with its flagships for a few generations. But this phone is special: It can be had for as low as $199 with the right deals.
The iPhone SE is said to have pretty much all the features of a great smartphone, without dual cameras, and without an ultra-large screen. That’s enough for most people, and it makes it so that consumers are able to gain access to the features they need without having to pay too much during a difficult time.
And that also lowers the “stigma” on cheaper phones, such as Android models. Samsung and other leading manufacturers have been developing very powerful sub-$400 phones, in direct contrast to a couple of years ago when early every phone had to be over $600 to be remotely useful.
The race to the top in terms of price for phones may very well be over, though it’s likely that flagship phones are going to remain above that price point. It’s been set by consumers, and businesses now know what consumers are willing to pay.
Apple Stock Continues to Struggle
Despite the launch of an exciting new product, Goldman Sachs has downgraded Apple to a “Sell” and market outlook is no longer positive. It’s expected that Apple could drop as much as 20% in the next year due to the pandemic.
This isn’t the point of view of everyone. Some analysts believe that Apple will rebound almost immediately after the COVID-19 pandemic is over. Other analysts think that it will take much longer. But very few believe that Apple stock will never rebound, which is the more important takeaway for an investor.
Apple has been suffering for the past couple of years, especially during the time of the Chinese tariffs. Apple relies significantly on Chinese materials and manufacturing, and during the tariffs prices were increasing and revenues were getting cut.
The End of an Era?
The future outlook for Apple is, consequently, unpredictable. Though the pandemic is one issue that is causing its stock to fall, it’s not the only issue. But it’s moving in the right direction. As a luxury consumer good, its high-priced products aren’t likely to sell even after the pandemic, as the economy is likely to fall into recession. But lower priced products such as the iPhone SE may be alluring enough to perform well in retail.
2020 may be the year of cheap stock for a lot of investors, especially blue chip stocks that are likely to rebound quickly once the disaster is over. Apple is making some bold moves in the market that consumers are reacting positively to. Though Goldman Sachs may have downgraded the stock, there is some reason to believe that it will eventually rebound.
