Very soon after Apple had triumphantly announced it sold 9 million new iPhones through the first weekend of availability, speculation started percolating about whether the sell-through to consumers was actually far less than that, possibly around 5.5 million units. Some analysts believe that much of the channel buildup is iPhone 5c units, which haven’t sold as well as the flagship iPhone 5s. The curious thing about Apple’s share price is that it is hovering around $490 on Tuesday afternoon. That is less than 5% above the level where Apple’s stock was trading before the company made the dramatic debut weekend sales announcement. It seems odd that the stock has not moved up more than that — Wall Street’s weekend unit consensus was 5-6 million and beating that by more than 50% should have triggered an ecstatic response. It looks like some investors are buying the channel fill theory and refraining from jubilation at the moment.
The thing is, news about tepid iPhone 5c sales does seem to be trickling in from around the world. The iPhone 5c is shipping within 24 hours from Apple stores across the globe, with no quick sellouts reported. The respected Australian newspaper The Age just published a remarkably detailed list of signs that iPhone 5c sales are notably slow Down Under. According to Localytics, iPhone 5s is outselling the iPhone 5c by 11 to 1 margin in Australia. Aussie retailers and telco managers interviewed for the article spoke of how it was “really hard” to sell the iPhone 5c and how “95% of them remain in the stock.” Similar comments have circulated in the British press.
But would the tepid iPhone 5c demand really be a problem for Apple?
The more expensive iPhone 5s seems to be a roaring success by all accounts, with the gold version an instant sellout across the globe. Perhaps the existence of the 5c model is just reinforcing the consumer preference for the more elite version. Arguably, it would have been a far bigger headache for Apple if consumers had flocked to iPhone 5c at the expense of the iPhone 5s.
Apple can easily pull back from iPhone 5c production and step up iPhone 5s production, adjusting the mix ahead of the holiday quarter. Perhaps Wall Street’s hesitation is merely a sign of deep fears about the state of consumer demand holding up as we head into the Christmas shopping season. That skepticism could fuel further gains for Apple’s stock — climbing a wall of worry tends to be how stocks make sustained moves up.