That’s likely good news for Apple investors this year, as the company seems poised to break its all-time holiday sales record with brisk sales of the iPhone 13 heading into the all-important end-of-year shopping season. But global supply chain issues could put coal in Apple’s stocking.
By sales of the iPhone, there’s little question that Apple lives and dies. By pushing heavily into services and wearables, the company has worked diligently in recent years to reduce its reliance on its flagship device. Much of the company’s fortune rests on the success or failure of this single product line, the iPhone’s sheer dominance and despite Apple’s best efforts.
Long and growing delivery times for the iPhone have historically been a pretty good gauge of strong demand, giving analysts’ and investors alike insight into sales of the iconic device. Wedbush Securities analyst Dan Ives has put pencil to paper and concluded that demand is outstripping supply by roughly 15% ahead of Black Friday when the holiday shopping season begins in earnest.
A telling indicator
But there’s a catch
“We estimate that Apple is on pace to sell [approximately] 40 million iPhones between Black Friday and Christmas,” Ives wrote in a recent note to clients, “which would be [a] record holiday pace for the company.” Ives cited channel checks that suggest “tremendous demand trends” across the U.S. and in China as evidence that Apple could sell more than 80 million iPhones during the holiday quarter. To put a bow on this holiday package, Ives sees strong demand for pricier “Pro versions driving higher ASPs [average selling prices].”
The news isn’t all good, however. Global supply chain issues have been making headlines for months, with no relief in sight. President Joe Biden stepped in, announcing that the Port of Los Angeles would join the Port of Long Beach in operating around the clock to help clear the logjam of ships waiting to unload goods and supplies. There also remains a shortage of shipping containers and truck drivers to transport them.
Ives acknowledges the “chip shortage and Rubik’s Cube logistics that Apple (and every other technology, auto, and retail vendor) is dealing with.” But he remains undeterred, saying he expects record sales “despite the lingering chip shortage limiting iPhone supply globally by roughly 10 million units based on our analysis.”
Spreading holiday cheer for investors
Ives isn’t the only one spreading holiday cheer. Morgan Stanley analyst Katy Huberty studied Apple’s most recent regulatory filings and detected a 25% increase in inventory held by the company’s manufacturing partners. Huberty concludes that a larger number of iPhones in the pipeline is indicative of stronger demand. If these analysts are right, it certainly bodes well for Apple investors. The company closed out fiscal 2021 (ended Sept. 25, 2021) with record sales of the iPhone, helping push the stock — and Apple’s market cap — to a new all-time high.