Jefferies has turned bearish on Apple, warning that the company’s much-anticipated foldable iPhone could fail to ignite a new upgrade cycle amid slowing smartphone demand.
In a new interview, Jefferies analyst Edison Lee says the firm has downgraded Apple (AAPL) from Hold to Sell, citing a lack of meaningful innovation and mounting structural headwinds across the mobile industry.
“This is a longer-term call. I think that the smartphone industry—not just Apple, but all the Android guys too—is actually facing a much more serious structural slowdown, mainly because there are no innovative features that your current phone cannot do.”
He says most improvements are now incremental and unlikely to drive mass-market adoption.
“We also think that foldables next year are pretty exciting for Apple, but of course, it’s not a brand-new form factor. It’s been around for a number of years.”
He points to Samsung’s latest model to illustrate the limits of the trend.
“If you look at the latest Samsung foldable phone, which is called the Galaxy Fold 7, it’s set at around $2,000. It’s a very, very nice phone if you go and see it and feel it. But I think the volume is not going to be more than 3 million.
I think that iPhone potentially can sell three times more than that, because they have a very high-end, loyal customer base. But still, that probably is not enough to move the needle.”
Lee says the real challenge is that few users feel compelled to upgrade. He describes Apple’s upcoming foldable as a halo product, not a mainstream one.
“If you’re using an iPhone 13, do you have to buy an iPhone 17, or can you buy a used iPhone 15 or 16 at a fraction of the price?
There’s a lot of hope and enthusiasm about next year’s foldable iPhone, which would be a new form factor for Apple. And given the better-than-expected reception to the iPhone 17, I think some investors believe that the replacement cycle is coming back. But I just want to be more cautious because the structural headwinds are pretty heavy.
And I think that the foldable phone next year is a US$2,000 ‘solar phone’ in our view—and that’s why it can’t be a mass-market product.”
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