There’s no doubt that the 2020 holiday season will be quite different this year compared to previous years. The onset of the novel coronavirus has led to lockdowns and unemployment. How will this impact Apple’s (NASDAQ:AAPL) tech-gadget sales, and what will be the short-term trajectory of AAPL stock?
Shareholders must consider the net effect of the pandemic. Granted, many people have less discretionary income this year than they did in 2019. That could make it more difficult to buy pricey Apple products during the holiday shopping season.
On the other hand, pent-up demand is a major factor to consider. Remember how crowded the airports were on Thanksgiving? And how robust the Black Friday retail-sector sales were?
As the most highly anticipated part of the holiday season approaches, AAPL stock traders have much to consider. There’s a tug-of-war going on between eager shoppers’ demand for Apple products and their limited financial means. Will AAPL shareholders emerge victorious?
A Closer Look at AAPL Stock
Before the shopping spree gets under way, let’s take a step back and assess where AAPL stockholders stand now.
After bottoming out in March at around $56, AAPL stock went on a wild bull run. Amazingly, the AAPL share price managed to reach $134 on the first day of September.
There’s an old saying in the markets that trees don’t just grow straight up to the heavens. In other words, stocks don’t simply move up in a straight line.
Thus, the AAPL stock bulls had to take a breather after that incredible run. From September through November, the share price wavered and generally went sideways.
So now, the essential question is about whether AAPL stock is basing for another big leg up. With the holiday shopping season afoot, a strong argument could be constructed in favor of higher prices for AAPL.
The iPhone “Supercycle” Thesis
Of all the tech gadgets on the market today, the most eagerly anticipated one might be the long-awaited iPhone 12. AAPL stock traders will undoubtedly watch the sales numbers closely as Apple rolls out its latest iPhone version.
Wedbush analyst Daniel Ives has an interesting concept regarding the iPhone. His “supercycle” thesis suggests that there could be an out-and-out iPhone-buying frenzy this year.
For one thing, Ives observes that “pre-orders tracked more than 2x its predecessor iPhone 11 thus far,” thereby indicating a “robust start out of the gates.”
Ives furthermore believes that “350 million of 950 million iPhones worldwide are currently in the window of an upgrade opportunity.” That’s a wide range, we must admit. Yet, even at the lower end of that range, this represents a huge number of iPhones that are ready to be upgraded.
Don’t Forget the AirPods
Citing the iPhone “supercycle” thesis, Ives assigned AAPL a rating of “outperform” along with a price target of $150.
That’s a fairly compelling argument, but there’s more to Apple’s business model than just the iPhones. Let’s not ignore the importance of the wireless Bluetooth earbuds known as AirPods.
In late November, analysts at Wedbush forecast that Apple “will sell roughly 18 million AirPods during the course of the next month.” Heading into the holiday shopping season, the Wedbush analysts observed a “surge of consumer demand for Apple’s AirPods Pro” while noting “some good discounts on the horizon.”
Here are several highlights of what Wedbush expects in regard to the AirPod:
- More than 90 million AirPods units sold in 2020
- Possibly 115 million AirPod units sold in 2021
- A new version of AirPods to be unveiled in April or May of 2021
Like Ives, the Wedbush analysts issued an outperform rating for AAPL stock.
The Bottom Line
Are you ready for the holiday-season “supercycle” in iPhone 12 sales, and possibly in AirPod sales as well?
Getting ready doesn’t necessarily mean that you have to buy those products. As a forward-thinking investor, it just means that you could position yourself now to capitalize on the next leg up in AAPL stock.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content — and crossed the occasional line — on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.