Apple Cancels All-Glass iPhone Redesign Amid Manufacturing Woes

Apple's flagship redesign, an all-glass iPhone, has been canceled due to unacceptably low manufacturing yields. The news comes as a blow to Apple investors who were celebrating a record quarter just days earlier. A scrapped flagship redesign, surging component inflation from memory costs, margin compression, and a wave of Wall Street downgrades have hammered bullish sentiment.

The canceled iPhone would have showcased a bezel-less concept with a quad-curved display, under-screen Face ID, and vibration-based audio. However, Apple's inability to produce the device has left many questioning the company's innovation pipeline. The cancellation also deprives Apple of one potential catalyst to lift average selling prices as input costs surge.

Bulls are pinning their hopes on resilient iPhone demand, stable hedge-fund positioning, and the delayed foldable iPhone as the next driver of average selling price. However, bears argue that soaring memory costs could push the foldable's starting price above $2,000, shrinking it into a niche product.

Apple's fiscal third-quarter revenue of $109.4 billion was a record, with EPS of $2.02, while product gross margin jumped to 40.1% from 34.5%. However, management guided fourth-quarter revenue growth below consensus based on rising memory costs. Jefferies cut Apple to Underperform with a $263.66 target.

The average analyst price target of $322.28 suggests moderate upside potential, but the downside risks are outsized and dwarf the upside potential. Options traders strike a more relaxed tone with a put-call open interest ratio close to 0.65, suggesting a modest price-action adjustment.