Apple Faces Toughest Stretch as iPhone Price Ceiling Hits

Apple's stock is facing its toughest stretch in years due to concerns over iPhone pricing. Jefferies downgraded Apple to 'underperform' on Monday, citing a lack of ways to make iPhones more expensive without losing customers. Analyst Edison Lee stated that the cancellation of the planned all-glass iPhone model, which was supposed to be the excuse for a higher price tag, shows that introducing new form factors in the iPhone is more difficult than expected.

According to Lee's supply chain checks, Apple has been trying to push iPhone prices higher for years by giving customers a reason to pay more with fresh designs or flashy features. However, the foldable iPhone will now be the only key driver of higher ASP and margin. Yet, rising costs for components like memory chips will force Apple to price the foldable phone very high, making it a niche product.

Wall Street is losing patience with Apple's stock, which has been sliding since its quarterly results showed weak sales forecasts due to component shortages. Jefferies' new price target is below Apple's current closing price of $313.33. The average analyst rating for Apple is currently 3.88 out of 5, a low not seen in five years, with less than six in ten analysts recommending a buy.