Why is everyone talking about Apple? | The colorful fool

Apple‘s (AAPL 1.69%) Since mid-September, the stock is down about 10%. The main causes of the decline were numerous reports that sales for the base model iPhone 14 and 14 Plus were underwhelming and an overall slowdown in consumer demand in the tech market.

As the highest rated company in the world with a market cap of $2.37 trillion, Apple is one of the most audited companies in the world. The past two months have been no different, as analysts pick apart the company’s September iPhone launch and mid-October reveal of the 2022 iPad lineup.

Understanding the strategy behind Apple’s recently announced products can be a great way to predict how far your investment will go. That’s why Apple’s new products make headlines.

A confusing iPad launch

On October 18, Apple unveiled its iPad 2022 refresh by introducing a redesigned base iPad and improved iPad Pros. Time will tell how consumers like Apple’s new tablets, but the media was quick to criticize the devices. Bloomberg has called the new iPad range “stunning”, while Techradar said that “software and now hardware is a mess”.

The main reason for the confusion lies in upgrades to the entry-level iPads but not to the Pro versions. The base iPads received a redesign with new colors, relocation of the front camera to the edge of the landscape, and a revamped Magic Keyboard accessory. Meanwhile, the 2022 iPad Pro models received the smallest update in their history. They’ve been upgraded to the M2 chip, making them 15% faster than their predecessors, along with other minor performance improvements.

However, the more expensive versions didn’t get the same optimal camera shift or redesigned Magic Keyboard. The Pro models didn’t even get the usual camera or display upgrades that consumers have come to expect year after year. As a result, Apple has given consumers little reason to upgrade to the 2022 iPad Pro and created confusion by omitting features from the base iPad.

What’s more, despite the base iPad’s more enticing upgrades, it hasn’t escaped criticism. The tablet has undergone a major redesign, including the charging port, which has switched from Lightning to the market-preferred USB-C. However, it’s still only compatible with the 2015 Apple Pencil accessory, which charges via lightning, and not the redesigned 2018 version, which charges magnetically on the side of higher-tier iPads. As such, users will need to use an adapter to charge their Apple Pencil with the new base iPad.

The iPhone 14 Plus is a bust

In addition to a bewildering iPad lineup, Apple is reportedly facing dismal demand for its iPhone 14 Plus, which hit stores on October 7. The base model iPhone was announced on September 7, along with two new Pro models and one standard model. large base model. Apple had high hopes for the larger iPhone 14 as it meant a shakeup in the lineup. Since 2017’s iPhone 8 Plus, there hasn’t been a base Plus model since the larger iPhones were exclusively Pro versions.

However, the rising cost of living and a difficult price point prompted Apple to halt production of the iPhone 14 Plus on October 18 to reassess demand. According to The Information, two of the company’s suppliers are cutting production by 70% and 90%, respectively.

The iPhone 14 Plus is a logical price point in the lineup at $899, while the smaller iPhone 14 is $799 and the Pro models are $999 and $1099, respectively. However, if you look at Verizon Plans cost the 14 Plus $24.99/month, the 14 Pro Max $30.55/month, and the 13 Pro Max $10/month. With many Americans likely to get their new iPhones through a carrier plan, there’s little reason to buy the Plus.

Consumers who want the biggest iPhone can get the 14 Pro Max with all the new features for an additional $5.56 per month, or those with older phones can get the 13 Pro Max, which is 60% cheaper than the 14 Plus and offers more functions.

Should You Buy Apple Stock?

Disrupted iPhone sales are a concern given that the popular devices have accounted for 40% to 70% of Apple’s sales over the past decade. In fact, iPhone sales accounted for 49% of Apple’s reported revenue for the final quarter of 2022.

Given these details, it’s entirely possible that the tech company is heading for a weak quarter. Still, Apple probably won’t stay down for long. After all, Apple is home to some of the most innovative and popular products in the world. This unique strength has helped Apple stock grow 270% over the past five years despite a pandemic and reduced demand for iPhones in 2022.

The company reported free cash flow of $20.79 billion last quarter, indicating it’s fully equipped to weather a year of weak iPhone sales. Ultimately, Apple stock remains an excellent investment over the long term.