Apple ditched price hike on iPhone 14: ‘they can maintain margins’
The iPhone 14 is here – and it’s uniquely more exciting for the consumers since Apple Inc (NASDAQ: AAPL) decided in favour of not raising the price of its new handset in the United States.
Could that result in a hit to margins?Copy link to section
Price hike is a broadly used tool that helps businesses offset the rising costs. Interestingly, though, keeping them unchanged, as per Gene Munster (Loup Ventures), will not mean a hit to margins for the iPhone maker.
They’ve maintained margins over the past year at 43% despite spiking costs. That’s one of the reasons why Apple investors can sleep well at night knowing that despite these spiking costs, they can maintain margins.
The new iPhone comes with added safety features that you can read more about here.
It’s available in four different variants; the iPhone 14, a 14 Plus, 14 Pro, and a 14 Pro Max.
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Apple will get to expand its market shareCopy link to section
Munster is convinced the resolve to launch the iPhone 14 at the same price will help Apple expand its global share in smartphones that’s been stuck at around 18% in recent years. On CNBC’s “Squawk Box”, he said:
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I suspect the maintained pricing will increase their market share by a percent or two. When you run that through the model for the next two or three quarter, it essentially means that there can be some fractional upside to the iPhone numbers.
Global smartphone sales were up a not-so-encouraging 6.0% in 2021. Still, iPhone remained strongly in demand with sales mounting a much bigger 23% on a year-over-year basis.
Investors should consider buying Apple shares that are currently down 15% year-to-date since they have upside to $183 on average, as per the Wall Street consensus.