Apple Stock Falls As Sales Pitch For Headset Fails To Convince
Apple (AAPL) stock dropped Tuesday as investors weighed prospects for the company's pricey new computer eyewear, Vision Pro, which critics on social media derided as "nerd goggles."
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Apple unveiled its long-awaited mixed-reality headset Monday at an event at its Cupertino, Calif., headquarters. Vision Pro starts at $3,499 and will go on sale in early 2024. Most analysts had expected the device to cost about $3,000 and go on sale later this year.
"Although we are impressed by its best-in-class hardware/immersive capabilities, we think Apple failed to identify why it's a must-own device for consumers, at least for now," CFRA Research analyst Angelo Zino said in a note to clients. However, he reiterated his buy rating on Apple stock.
Vision Pro looks like a sleek pair of ski goggles and is packed with cutting-edge technology combining virtual reality and augmented reality. Apple is pitching the product as a "spatial computer" with applications in entertainment, communications and productivity.
On the stock market today, Apple stock retreated 0.2% to close at 179.21. On Monday, shares fell 0.8% to end the regular session at 179.58.
Apple Stock: Vision Pro Is Meme-Worthy
The hype leading up to the introduction of the Apple Vision Pro was "overdone," KeyBanc Capital Markets analyst Brandon Nispel said in a note to clients. That set up a "sell-the-news" reaction for Apple stock, he said.
Jokesters on social media have had a field day with Vision Pro since its announcement. They've mocked its high price and front display that shows a user's eyes.
News website Insider said the goggles have "endless meme potential." Another Insider story criticized the headset as lacking in traditional Apple elegance and looking more like "nerd goggles."
And Twitterati compared the device to eyewear seen in science-fiction movies and TV shows.
Apple Stock Downgraded After Headset Debut
Meanwhile, D.A. Davidson analyst Tom Forte downgraded Apple stock to neutral from buy after the Vision Pro introduction. He also cut his price target to 185 from 193.
"We believe there are important structural challenges for Apple when it comes to consumer adoption of AR/VR hardware, which could limit the near-term impact on its sales and profitability," Forte said in his note to clients. Chief among those challenges is the high price of the device.
The Vision Pro is a long-term "show-me" story until it can establish a killer app, Morgan Stanley analyst Erik Woodring said in a note. He rates Apple stock as overweight, or buy, with a price target of 190.
"The best way to frame our sentiment for the Vision Pro is cautiously optimistic," Woodring said. "We look to the October period as the next potential catalyst to gain better clarity on initial volumes, yields, 'killer apps' and exact launch timing."
State-Of-The-Art Technology
Apple describes Vision Pro as "a revolutionary spatial computer that seamlessly blends digital content with the physical world, while allowing users to stay present and connected to others."
The device has a three-dimensional user interface controlled by hand gestures, eye movements and voice. Users can browse through apps by simply looking at them, tapping their fingers to select, flicking their wrist to scroll, or using their voice to dictate.
Vision Pro features an ultra-high-resolution display system and a dual-chip design. The headset has 12 cameras, five sensors, and six microphones. It can plug in for all-day use and gets up to two hours of use with an external battery.
The Apple headset is technologically impressive but doesn't have a compelling use case, Jefferies analyst Andrew Uerkwitz said in a note.
"Admittedly, we struggle to define the need for the device," Uerkwitz said. He reiterated his buy rating on Apple stock with a price target of 210.
Meanwhile, Apple stock remains on the IBD Tech Leaders list.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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Source: Investor's Business Daily
