Apple, Inc. AAPL has scheduled its “Wonderlust” iPhone 15 launch event for Sept. 12, and typically the stock rallies in the run-up to the event. This time around, things could be different, according to Daniel Niles, founder and portfolio manager at Satori Fund.
What Happened: Since Niles recommended buying Apple for a high probability trade on Aug. 18, going into the iPhone 15 launch event, the stock has gained 9%, outperforming the S&P 500’s 3% gain, the fund manager said.
Niles said he is starting to sell his Apple position, given Chinese tech company Huawei’s breakthrough with its 7nm processor node technology for its new Mate60 Pro that promises 5G-like speed. “Plan to be short $AAPL near IP 15 launch,” he added.
The Huawei Threat: Explaining his rationale, the fund manager noted that Huawei had a nearly 19% peak smartphone share in 2019 and its market share was crushed following the U.S. semiconductor ban.
The initial batch of Huawei’s Mate 60 Pro, priced at $960, sold out within hours of the commencement of presale, and other interested customers have placed orders for future purchases, the Wall Street Journal said.
See Also: Everything You Need To Know About Apple Stock
The fund manager also sees a hit from China getting too aggressive with the ban on foreign phones in government offices. Apple derives about 19% of its revenue from China, he said. A Bloomberg report said Thursday that China plans to expand a ban on the use of iPhones in sensitive departments to government-backed agencies and state companies.
Martin Yang, an analyst at Oppenheimer, said, “The government ban and the new Huawei phone will be material events for the iPhone,” the Wall Street Journal reported.
"The two combined will drive more Android users to upgrade to Huawei, or iPhone users going back to Huawei,” the analyst said, adding that Apple could lose 10 million iPhone shipments in 2024 due to the new Huawei phone.
Unattractive Valuation: Nile noted that Apple is trading at a P/E multiple of 29 times the estimated earnings for 2023 for a 1-2% revenue growth in calendar years 2022/2023. The is high relative to the S&P 500’s P/E multiple of 21 times.
Apple ended Wednesday’s session down 3.58% at $182.91, according to Benzinga Pro data.
Read Next: iPhone 15 May Face Hurdle In China As Government Officials Receive Foreign Device Ban, Says Report
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