Apple shares fall 5% as analysts criticise new iPhone prices

Tech goliath Apple’s shares fell more than 5% after three major banks downgraded the company’s shares after it launched two new models on Tuesday, the iPhone 5S and the cheaper iPhone 5C.

Apple Shares closed down 5.4% at $467.71 on the Nasdaq yesterday.

Analysts at Bank of America Merrill Lynch, Credit Suisse and UBS are worried that the launch of the new models will not help the company’s stake in emerging markets.

They said that the 16 gigabytes 5C model, which has been priced at £469 ($740), is still expensive for emerging markets.

In a statment, Credit Suisse said: “We remain disappointed with Apple’s decision to remain a premium priced smartphone vendor, and this continues to competitively expose the company and limits its total addressable market and growth. Given a lack of market expansion and lower iPhone sales potential, we lower earnings per share by 8% for 2014.”

“Investors were put off that Apple’s price point didn’t go low enough to attract a new market,” Mark Luschini, chief investment strategist at Janney Montgomery Scott, told the BBC.

Analysts at UBS said: “We are downgrading Apple on the concern that Apple’s pricing strategy will hamper the company’s ability to be competitive in key growth areas in the smartphone market, particularly in China. We were surprised by the high price of the 5C at just $100 under the 5S without a contract, leaving little differentiation. Apple said that two phones replace the old 5, leaving the 4S as the low-end option – a three-year-old form factor.”

Analysts from Bank of America Merrill Lynch and Piper Jaffray also voiced the same sentiment.

Readers' comments (1)

  • Ian Middleton

    It's a strategy that Apple have pursued for some time now - repackage pretty much the same technology as everyone else but in prettier boxes and at a premium price. That's really been the source of their enormously positive cash flow. Hence the recent protectionist moves to hamstring the likes of Android, who by and large provide a far superior product at much more accessible price points.

    With recent iPhone models failing to inspire in terms of functionality and reliability, I think it's only a matter of time before we see the shine well and truly knocked off the Apple logo.

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