Apple (NASDAQ:AAPL) started off Tuesday with a bit of a bang — or a thud, depending on who you ask. Apple watchers had been expecting a rare December product release. Among the potential new products the company had been rumored to be working on were over-ear headphones. The company proved the rumor mill correct with the release of the AirPods Max. Those who had been wondering if the new Apple headphones would have the potential for an AirPods-like boost to AAPL stock have their answer.
At a whopping $549, the AirPods Max headphones are not going to be flying off Apple store shelves. The disappointment from Apple fans and investors is perhaps worse than when the company launched its $349 HomePod smart speaker. The new headphones are incredibly capable and smartly designed, but the ultra-premium price limits them to well-heeled buyers.
Apple Releases AirPod Max Headphones
On Dec. 8, Apple introduced its long-awaited AirPods Max headphones. As you might expect, the wireless over-ear headphones are loaded with the latest tech, including active noise cancellation, adaptive EQ and spatial audio. They feature an attractive design using premium materials and are offered in multiple colors. The company used the Digital Crown from the Apple Watch for on-ear controls, including Siri activation.
We knew they were not going to be cheap, but the price of the AirPods Max is steeper than expected at $549.
To put that price into perspective, just $50 more will get you last year’s iPhone 11. Competing premium wireless headphones regularly go for $200 less. Apple’s own Beats Pro wireless headphones — previously the company’s most expensive headphone offering — have a $399 price tag.
The reaction so far has largely been sticker shock.
These Lack AirPods Potential
Apple describes the new headphones as having “the magic of AirPods in a stunning over-ear design.”
However, they are not going to have the same magic as AirPods when it comes to AAPL stock. Priced from $159 to $249 (for AirPods Pro), the wireless earbuds have become Apple’s fastest-growing product segment. In 2019, it was estimated that AirPods generated $12 billion in revenue for the company. AirPods alone generate more revenue than many of today’s top tech companies.
One of the keys to the success of AirPods has been affordability. They were aspirational, but not out of reach for the average consumer. AirPod Max headphones lack that selling feature. Sure, they have plenty of appeal — especially for Apple fans who want to show they’ve adopted the latest and greatest — but that price tag is going to keep them out of reach for most. This is not a product that’s destined to sell millions of units.
With Potential Comes Risk
Let’s circle back to the HomePod smart speaker. At $349, the original looked great, sounded great, but was priced too high to appeal to the mass market. However, in November, Apple finally released a $99 HomePod mini. This was the affordable version aimed at the mass market. And guess what. It sold out on the first day it was offered. Lots of people will be receiving a HomePod mini as a gift this holiday season.
Apple could take the same approach with the AirPods Max. Doing so would certainly kickstart sales. The risk for Apple is that it already offers a line of popular, more affordable wireless headphones in its Beats brand. A more affordable AirPods Max would be at high risk of cannibalizing those Beats sales.
Bottom Line on AAPL Stock
The new Airpods Max headphones aren’t going to move the bar on AAPL stock. However, they arrived just in time to be eligible as luxury Christmas gifts. That’s only going to boost what is already expected to be a blockbuster holiday quarter for the company. Analysts are getting excited about Apple again, and with AAPL currently trading well below its September high, there’s still time to get in on the action.
AAPL stock currently has an “A” rating in my Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.
