Apple Inc. (AAPL) Stock Drops Due To Innovation Concerns

Posted Sep 11, 2013

Apple Inc. (NASDAQ:AAPL) stock has dropped since yesterday’s release of the iPhone 5c.  Analysts downgraded the shares saying that the iPhone 5c is not cheap enough for emerging markets and that the company is now innovating quickly enough.  Bank of America-Merrill Lynch downgraded Apple to “neutral” from “buy.”  Credit Suisse, Piper Jaffray and UBS analysts also made similar actions.  As of the time I was writing this, Apple’s stock is down $24.70 (around -5%).

At yesterday’s media event, Apple introduced two new phones with features like a fingerprint sensor and iOS 7.  The iPhone 5s has a few metallic shades and the cheaper iPhone 5c has five plastic colors.  UBS analyst Steven Milunovich downgraded Apple due to the lack of competitiveness in growth markets.  However, Milunovich said that he was impressed by the specs of the 5s and the addition of NTT DoCoMo.

“We were surprised by the high price of the 5C ($549/649) 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,” stated Milunovich.

Some analysts believe that Apple could have done more with the fingerprint scanner rather than being just a “cool factor” and saving users a few seconds.  Perhaps the fingerprint scanner could be used with home automation.