Jefferies Slashes Apple Stock Rating Amid Foldable iPhone Concerns

Jefferies, a well-established investment firm, has downgraded Apple's stock rating from 'hold' to 'underperform', effectively recommending that investors sell their shares. This downgrade is based on the firm's analysis of Apple's supply chain and its potential impact on the company's profit margins.

The analysts at Jefferies pointed out that Apple had scrapped development of an iPhone with an all-glass body, which was expected to be unveiled next year in celebration of the 20th anniversary of the iPhone. This move is seen as a setback for Apple's plans to increase its average selling price by introducing new smartphone form factors.

The firm also noted that rising memory costs and limited progress in artificial intelligence are further contributing to their downgraded outlook. In fact, Jefferies estimates that the cost of memory will be a major factor in pricing the upcoming foldable iPhone, which could reach as high as $2,199 for the 256 GB version and $3,099 for the model with 2 TB of storage.

This is not the first time Apple's stock has been downgraded by Wall Street firms. In fact, at least six other firms have assigned a 'sell' rating to Apple, matching the high set in 2012. KeyBanc Capital Markets had already downgraded Apple to 'underperform' in July due to concerns about iPhone demand.

Apple's stock has been under pressure since the company announced that it expects iPhone sales growth to slow down to mid-teens in the current quarter, compared to 22% growth in the previous quarter. The firm also warned of pressure on its gross margin in the current quarter.