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It’s an iCatch 22.
Is Apple’s iPhone 15 so valuable to consumers that you’re better spending your money on the device instead of the company’s stock? Or is it such a minor upgrade on the previous version that you should hold onto your iPhone 13 or 14, and use your hard-earned cash to bet on the share price, which has proved those rare skeptics wrong time and again.
The iPhone 15 is expected to have much in common with its predecessor. Analysts see a starting price of around $800, and expect the new version to be 6.1 inches, while the iPhone 15 Plus will be 6.7 inches. The iPhone 15 Pro and Pro Max could get a new processor that makes them faster than their predecessors, but Apple isn’t likely to pack in any groundbreaking new features.
In addition to improvements in battery life and the camera — particularly the zoom function, which would help it rival the specifications of Samsung smartphone cameras — consumers are more likely to be interested in reports that the phone will have a USB-C port instead of the Lightning port, making it more compatible with cables that users already have in their homes.
“Given how they have historically performed and how iPhone devices are depreciating devices, two, three years from now — you’re probably better off with the stock,” said Angelo Zino, technology and equity analyst at CFRA Research. “We have a buy recommendation on the stock; we think you’re better off buying the stock than the actual device any day of the week.”
iPhone price and Apple stock
“Hardware devices — whether we’re talking about iPhones, PCs or iPads — typically go down in value over time,” Zino told MarketWatch. “Technology in itself is intended to be deflationary in nature. The whole point of technology is to drive costs down and make things cheaper, but Apple is the one company in the world that is able to increase prices over time.”
That’s good for investors, bad for customers. “Smoothing out all the cycles, you’re looking at an average selling price increase of 3.5% to 4% of iPhones,” Zino said. “You can make the case that you’re better off buying a device today, if you’re willing to hold onto it for the next five to six years, but by then the iPhone may be 15% to 20% more expensive.”
Apple’s
AAPL,
stock has risen 27% over the last year, while the Nasdaq Composite
COMP
increased nearly 22% over the same period. But there are signs that demand may be slowing for the iPhone. More people are holding onto their phones for three years or more — 31% vs. 26% in 2019 — according to Consumer Intelligence Research Partners.
“‘I’m going to ride my current one until the wheels fall off. It’s an iPhone 13. It’s doing OK. It’s seen better days.’”
The company also faces possible headwinds in China. In an analyst note, BofA Securities
BAC,
analyst Wamsi Mohan said Huawei’s Mate 60 Pro+ could create trouble for Apple’s business in China. The smartphone contains a powerful 7-nanometer processor, reportedly giving it download speeds exceeding 5G phones, according to a teardown report by analysis firm TechInsights that was cited by Bloomberg News.
Mark Spoonauer, global editor in chief for Tom’s Guide, a site that provides technology reviews, is choosing the gadget over the stock. “For now, I’d say it’s smarter to buy iPhone 15 Pro Max as it looks like we are getting a bunch of welcome upgrades — stronger titanium design, handy ‘action’ button and a powerful periscope zoom.”
“I use an iPhone 14 Pro Max for testing, but I own an iPhone 12 Pro Max,” Spoonauer told MarketWatch. “It’s been a while since there have been exciting upgrades. It’s a big leap forward, especially for those who have older models. If you can get a bigger phone that’s lighter in your hand and in your pocket, that’s a big win.”
Luxury good vs. tech gadget
Ross Mayfield, investment strategy analyst on Baird’s Private Wealth Management’s equity and fixed income research team, says he’s sticking with his current iPhone. “I’m going to ride my current one until the wheels fall off. It’s an iPhone 13. It’s doing OK. It’s seen better days. The camera quality is incredible. Battery life wasn’t as good in the past, but it’s better now.”
Investing $800 in Apple’s stock is a bet on the entire Apple suite of products — from the Apple Watch to Apple TV. “We tend to live in the Apple ecosystem,” he told MarketWatch. “I always lean to buy a share ownership in a company that can appreciate in value over time. Something like an iPhone or car loses value as soon as you drop them off the lot. You can hold shares longer term.”
Apple’s iPhone is regarded by many consumers and analysts alike as both a luxury good as well as a tech product, but the former often increases in value over time, while the latter loses value. “The Venn diagram is pretty overlapping,” Mayfield said. “The cost is pretty high, dipping into luxury, but obviously a smartphone in general is a must-have at this point.”
Zino said his impetus to upgrade depends on the cycle. “I don’t know if I get as excited as I used to. The iPhone 12 cycle was a great cycle — that was the 5G cycle. “There are still a lot of advancements Apple can make on the phone side over the next 15 years, an ultra phone with no ports attached to it, for example, and a foldable device is about two years away.”
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