This morning, Goldman Sachs analyst Bill Shope said the best time to buy Apple’s stock is when it’s getting hammered over iPhone supply problems.Right now, the stock is down 13.5% from its September high, and much of that decline is attributable to the fact that Apple doesn’t have enough iPhone 5s in stock to sell people. Because of these tight supplies, analysts are cutting their estimates for this quarter and next.
Shope says this is providing a stock buying opportunity because eventually Apple is going to correct its supply problem, and people will be buying iPhone 5s.
However, Walter Piecyk at BTIG disagrees. He thinks supply problems are a bigger deal than most people realise. Because of a compressed product upgrade cycle, if a consumer can’t buy an iPhone 5 immediately, then she might just hold off until the next phone:
We certainly understand the positive headlines of “Apple sold as many phones as they could make” because it has been a valid indication of the strong demand for the companies product. In the past, these excess sales spilled over to future quarters in part because the product cycles were less compressed, the buyer did not already have a smartphone and Apple’s product differentiation was at a wider margin. We believe however, that Apple faces increased risk by not adequately ramping up the capacity for initial launch volumes. At this point the risk likely has less to do with a potential customer opting for and Android or Window’s smartphone over the iPhone and more to do with an existing smartphone user simply skipping a product cycle. The longer it takes a customer to get their iPhone 5 either because of a tightened upgrade policy or a lack of phone ability, the closer that customer will be to having to decide on whether to wait for Apple’s next product iteration. Ironically, if Apple is able to ramp supply and can’t hit some of the more aggressive street expectations, that might be even worse for the stock.