Mad Money

Cramer: Why analysts are wrong about the new iPhone

Key Points
  • "Mad Money" host Jim Cramer says Apple's new iPhone will entice far more young people than Wall Street analysts are anticipating.
  • Cramer uses his daughters' habits to explain why millennials will go crazy for the iPhone X.
Analysts are wrong about the new iPhone: Cramer
Analysts are wrong about the new iPhone: Cramer

CNBC's Jim Cramer is convinced that analysts who weren't thrilled about Apple's new iPhone release are missing something, and it may have something to do with age.

"I think one of the reasons why there was so little 'Wow, got to have it' about the new iPhone, at least among the analyst community, is that the analysts themselves might be too old to get their heads around the way younger people see these products. When new technology comes out, millennials, who tend to be too young to be senior analysts, are far more likely to figure out how to use them and how to adapt to them," the "Mad Money" host said.

Analyst reports from Credit Suisse, Canaccord Genuity, JPMorgan and Piper Jaffray were tepid, saying the product launch met expectations, while KeyBanc analysts were "disappointed" with the iPhone X.

But Cramer argued that younger people are likely to create buzz around new product features, download key apps and use the phones to engage with and document the experiential economy.

"If you're a baby boomer like me, then the best way to figure out what's happening or what's going to happen, especially when it comes to this kind of technology, is to watch what your own kids are doing," Cramer said.

For example, last week, Cramer's eldest daughter introduced him to Pokemon Go, a new mobile iteration of Niantic's hugely popular Pokemon game franchise.

The "Mad Money" host noticed three things when he played the game: first, it was a lot of fun. Second, it used a lot of the iPhone's battery. Third, it had a simple concept, reminding Cramer of games he used to play growing up.

"Playing Pokemon Go, I suddenly could envision a game that could talk to you in high resolution [and] allow you to communicate with others in real time with much more clever augmented realities. Those are not yet available, but these phones are coming closer and closer, and I want to see very much what the iPhone X can do along these lines," he said. "I know my kids will tell me much earlier than I will know myself."

Cramer's other daughter went on a cruise, to his surprise. While he is bullish on the cruise ship industry, he did not expect someone in her 20s to want to go on a cruise.

But the cruise had a millennial draw: It was themed around electronic dance music, or EDM.

"Cruises are fun, I get that," Cramer said. "More important, though, an EDM cruise is a chance to brand yourself via Instagram."

Boasting better cameras and resolution with nearly every model, iPhones help young people capture their experiences, Cramer said. The more photogenic the event, the better the photos, and the better the device, the more incentive millennials have to document their experiences.

"You think any of these post-50-year-old analysts get that?" Cramer said. "They don't see anything new because they don't understand how 20-somethings use technology to brand or even re-brand themselves. They don't understand silly games. They see everything as incremental. Younger people see everything as the ability to explore the seemingly un-explorable or re-create themselves to friends in a setting that's as compelling as a big-screen movie."

That's why some analysts wrote off the new iPhone as another "expected" move by Apple, Cramer said — they didn't realize that higher resolution, better battery life and improved photos would make the $999 special-edition phone worth the cost to younger buyers.

"One device can do hundreds of things that Wall Street analysts would never want to do or know about," Cramer said. "That's why it's 'Blah, blah, blah' instead of 'Wow.' That's why these analysts think the stock should be traded. And that's why they're wrong."

WATCH: Cramer takes on skeptical Apple analysts

Cramer: Why analysts are wrong about the new iPhone
Cramer: Why analysts are wrong about the new iPhone

Disclosure: Cramer's charitable trust owns shares of Apple.

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