The headlines certainly seem alarming. It has been reported that iPhone sales in the first quarter of 2024 decreased by 10% compared to the same period last year. In fact, the setback was so severe that apple (NASDAQ:AAPL) It has lost its top spot in the battle for global smartphone market share, which it had held just four quarters ago!
But as is often the case, such headlines don’t include much important context. Here’s the rest you need to know about this week’s news before you decide whether you need to exit your stake in Apple stock.
iPhone loses top spot again
This data was provided by technology market research firm IDC. In its latest survey of global smartphone shipments, the magazine reported that Apple shipped 50.1 million iPhones in the three months ending in March.That’s 10 million less than that number. samsung (OTC: SSNL.F) Delivered in the same quarter. This is also a big difference from the final quarter of last year, when iPhone shipped 80.5 million units, while Samsung shipped 53 million units.
This change in market share led Reuters to write an article with the headline, “iPhone shipments decline, Apple loses top spot among mobile phone makers to Samsung.” The Bloomberg headline, “Apple faces worst iPhone slump since coronavirus as rivals rise” is even more worrying.
To be fair, both headlines are technically accurate. However, there are some relevant details worth elaborating on.
The first of these details is that this change is not unusual.Apple is The usual It lost its leadership position in the global smartphone market between the fourth quarter and the following first quarter. In fact, as the image below shows, in seven of the past eight years, Apple has lost its fourth quarter market share lead to Samsung in the following first quarter.
why? iPhones are a popular gift during the holiday shopping season. Samsung smartphones are not like that. However, Samsung smartphones have historically sold better throughout the year.
Another detail worth understanding is semi-related. In other words, Apple started the first quarter of 2024 at a disadvantage. People’s reaction to the iPhone 15 when it was released in Q4 2023 was so strong that there were very few interested buyers who didn’t already own an iPhone 15 by Q1.
In addition, a small number of analysts morgan stanley‘s opinion suggests that many iPhone fans may be looking forward to the iPhone 16, which is likely to arrive later this year.
Of course, this is just a guess, but it’s not unreasonable considering that many of the iPhones in active use today are several years old. In fact, the iPhone 11, launched in 2019, remains the most used iPhone in the world, according to a recent report from Scientiamobile. These devices are nearly five years old now, so owners can’t wait that long to upgrade.
iPhone 12 and 13 are also currently the second and third most used Apple smartphones, according to data from Scientiamobile. They are also nearing the end of their useful life.
There’s no reason to let go of Apple stock.
please don’t read too much We’re pretty bullish on these additional details. To be sure, Apple still has some tough challenges ahead.
Look at the big picture as an example. While iPhone sales were strong in the fourth quarter, the long-term trend is stagnant. The company isn’t shipping as many iPhones now as it did a few years ago. iPhone revenue itself has similarly stagnated since late 2020, and the average selling price of the iPhone has likely reached its peak. Considering that about half of Apple’s revenue comes from iPhone sales, there is reason for concern.
But the situation is not as dire as this week’s headlines suggest. Below-average Apple is still a stronger company and has better investment prospects than many other companies that are doing well. At the very least, Apple is a cash-generating behemoth. You can purchase growth that you can no longer generate organically.
This simply goes to show that Apple’s first-quarter smartphone stumbles aren’t as big of a deal as these headlines make them out to be. There may be better options, but you can certainly do a lot worse than continuing this for a while.
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James Brumley has no position in any stocks mentioned. The Motley Fool has a position in and recommends Apple. The Motley Fool has a disclosure policy.
Worried about Apple’s stock price now that the company has lost its smartphone lead? Read this before you make a big move.Originally published by The Motley Fool
