This is a critical day for Apple Inc. (NASDAQ:AAPL) and it is likely to set the direction for AAPL stock, at least for the next week. The iPhone X was finally available for pre-order, beginning at 3:01 am EST. At time of writing — four hours later — the initial stock had run out and estimated shipping times had slipped to between five and six weeks.
That’s a marked contrast to iPhone 8 pre-orders that saw sufficient stock for near immediate shipment, even after the first week of pre-orders wrapped up.
Three big questions remain, each of which will have significant repercussions for AAPL stock.
- Is the rapid sellout a result of high demand, or because the company has a shortage of stock?
- Will the shipping date for iPhone X pre-orders continue to slip, or have we already reached peak demand?
- Will there be line-ups at Apple Stores next Friday for the official launch of iPhone X sales?
iPhone X Supply Issues
There have been rumors for months that Apple and its suppliers have been struggling with iPhone X manufacturing, with the advanced TrueDepth camera system and Face ID fingered as the main culprits. It appeared increasingly likely that supplies of the new flagship smartphone were going to be very tight at launch.
A report at the start of the week suggested AAPL had relaxed the specifications for the dot projector component of the system — potentially reducing the effectiveness of Face ID — in order to boost production, but the company has since denied that is the case.
The last time Apple released pre-order numbers for one of its smartphones was for the iPhone 6 in 2014. That model notched a record 4 million sales within 24 hours. With iPhone X shipping times dropping so quickly, that could mean iPhone X pre-orders are on pace to set a new record — good news for AAPL stock — or it could mean the company is experiencing a shortage.
The shortage scenario would not be great. Combined with slower-than-expected iPhone 8 sales, a shortage would jeopardize the hoped-for iPhone super upgrade cycle and it could drive potential buyers to choose a different iPhone, wait this cycle out altogether or even jump ship to another flagship alternative like Alphabet Inc’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google Pixel 2.
Have iPhone X Pre-Orders Peaked?
Apple does not stop manufacturing iPhones during the pre-order period and it’s now into full production mode, so presumably it’s able to crank out the iPhone X faster than it could in the weeks leading up to today. If shipping times for iPhone X pre-orders continue to remain weeks out over the next seven days, that could mean there are still manufacturing gremlins to deal with.
However, at this late stage it’s more likely to be an indicator of strong iPhone X demand, which would be good news for AAPL stock.
Will There Be Lines at Apple Stores?
The lines outside of Apple Stores were much smaller than usual when the iPhone 8 went on sale. In many cases, people were able to simply walk into the store and buy one, with no wait. That was an early red flag for what turned out to be slow iPhone 8 sales.
The iPhone X pre-orders continue for a week, then on Nov. 3, it’s available in stores. So keep an eye on Apple Stores to see if lineups begin forming. Big lineups will be a good sign that iPhone X sales will be robust. A lack of lineups? Well, that’s not going to help AAPL stock recover to to its post September iPhone event levels.
Today, we finally get our first hint of whether Apple is going to have a hit on its hands, with the shipping times for iPhone X pre-orders providing an early indicator of demand — or shortages. The next big thing to watch for is lines outside Apple stores as next Friday approaches. Shipping times that remain more than a few weeks out combined with big lines next week bodes well for iPhone X sales and for AAPL stock.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.