Apple: (AAPL: $108, up 2.4%) US wireless carriers Sprint and T-Mobile US announced that Apple iPhone 7 pre-orders are off to a strong start, countering earlier reports that indicated weak demand for the new smartphones, and controversy that Apple’s decision to not release sales figures was an effort to hide weakness.
Sprint reported that preorders of iPhone 7 and 7 Plus are up more than 375% (!) in the first three days versus the same period for the iPhone 6S series two years ago. The strength was attributed to the advanced features of the iPhone 7.
T-Mobile reported that preorders of the iPhone 7 series phones have crushed all previous iPhone preorder records at T-Mobile. Specifically, preorders from Friday through Monday were up nearly 4x compared to the next most popular iPhone. Moreover, Friday set a single day sales record for any smartphone ever in T-Mobile US history.
Analysts say that given Apple will not be releasing early sales figures for the iPhone 7 and 7 Plus, investors will be hanging onto any incremental information that provides color around the strength of this cycle.
The early enthusiasm for the iPhone 7 is a healthy sign for Apple, particularly after two quarters of declining sales for its flagship device. In fact, some investors were assuming that the upgrade rate was going to be lower than the iPhone 6, and now have to revise their forecasts higher. Perhaps most importantly, the good early data confirms there remains excitement around Apple products and that the customer base remains loyal.
BMR Take: The Apple brand is alive and well. Apple shares were up sharply today on a down tape with the S&P down 1.5%. That says it all. Can you imagine what Apple would have been up if the market was up 1.5% today? Yikes. We’d be looking at $113 again. The early data on the new phone is very positive and bodes well for the Christmas season fast approaching. (We saw Christmas decorations in K-Mart just yesterday. Just kidding!) We continue to see compelling value in the stock.