Apple stock: Slowing iPhone demand ‘should be taken seriously,’ analyst says

D.A. Davidson Senior Research Analyst Tom Forte joins Yahoo Finance Live to discuss the supply chain and innovation challenges threatening the demand of Apple products.

Video Transcript

BRIAN SOZZI: All right, we're also watching Apple, which is under pressure on concerns about iPhone demand. Tom Forte covers Apple at DA Davidson and joins us now. Tom, good morning to you. These concerns about iPhone demand, how serious should traders take this?

TOM FORTE: Sure, I think they are seriously-- should be taken seriously. At the same time, I do think it's a reflection still of a very challenged supply chain. If you recall, the company indicated they lost $6 billion in revenue in the September quarter because of supply chain issues. They suggested they'd have a greater loss in the December quarter. $6 billion is about six days of revenue for Apple in the December quarter. But yes, I think it should be taken seriously.

JULIE HYMAN: And so, when are these purchases going to come? I mean, the company, or the reports, I should say, make it sound like, Tom, that people are delaying their purchases just because they don't think they can even get an iPhone. So the implication there would be that the purchases will come eventually or not. Are the people going to buy? I mean, once you-- if you're an iPhoner, you're probably not going to go out and buy an Android at this point, right?

TOM FORTE: No, you're definitely not going to switch. If you looked at Apple's website earlier today, you would see on the most expensive 13 phones, the Pro and Pro Max, those still have a one to two-week delay. So I think this is a consumer who's watching clearly Yahoo TV and seeing that there's delays of the ports and not even interested right now in waiting for their product and but ultimately, will upgrade. You're seeing tremendous benefits from the carriers because they're trying to support the billions they've invested in 5G. So I agree with your assertion it's more a matter of when, not if.

BRIAN CHEUNG: Hey, Tom, Brian Cheung here. You know, this might be a circa 2019 argument, but I thought the whole thing was a shift to services. So does the stock reaction here kind of just illustrate how the company can't decouple themselves from the unit sales importance when it comes to investor sentiment?

TOM FORTE: That is a great question. I am a little concerned about how strong Apple's stock has been, given their commentary after the September quarter on the supply chain challenges. I'm wondering if there's an embedded call option in Apple, people now expecting an Apple EV. I think that might be part of what's going on as far as the stock. But I do think the stock has been surprisingly strong, despite sustained pressure. Not sure if it's an offset on services circa 2019, but I do think the stock's been surprisingly strong.

JULIE HYMAN: And let's talk about that a little bit more, Tom, because I admit I heard you in another interview where you talked about the boost the stock has gotten from the long rumored, reported on, speculated upon Apple car, right? And this environment-- I mean, we've been watching on this show EV stocks that have just gone crazy, right, anything having to do with either electric or autonomous vehicles. So it sounds like you think in terms of that expectation specifically that people have gotten a little ahead of themselves.

TOM FORTE: I do think that they have gotten ahead of themselves. The good news, though, for Apple dreamers, if you want to think about new products and new services, is that the slowdown pre-5G in premium smartphones has inspired Apple to look more broadly as far as new products and services. So I do think there's reason to believe that this time, it might be true on an Apple EV or an Apple autonomous vehicle software. But yeah, I think at this point in time, short of an announcement, we're a little ahead of ourselves here.

BRIAN SOZZI: All right, Tom Forte covers Apple at DA Davidson. Good to see you. Thanks for hopping on.