Apple’s share price at $90? Here’s why this analyst is shorting the stock

Published Wed, Sep 15 20218:52 PM EDT

Apple has launched a new cycle of iPhones — but one analyst is not sure if the latest devices will sell out in the coming year, and he's betting against the stock. Pierre Ferragu from New Street Research has a price target of $90 per share on the stock — that's 46.5% lower than the average 12-month price target of $168.29 from 24 Wall Street analysts, according to TipRanks.com . In a way, Apple may be a victim of its own success, he indicated. The success of last year's iPhone 12 — in part due to the pent-up demand from the pandemic — will weigh on Apple's ability to sell the new handsets next year, the analyst told CNBC's " Squawk Box Asia " on Wednesday. Apple shares rose 0.61% on Wednesday and traded at $148.96 after hours. "If iPhone shipments come down by 15% below expectations ... [it is] going to trigger a very, very significant selloff, very similar to what happened in early 2019," Ferragu said. "The stock lost 30% of its value in just a few weeks." "I expect a very similar phenomenon — a very short-lived pullback in the stock, but today's markets are what they are. When you have very, very negative earnings revision, you do get that kind of revision," he said. In January 2019, Apple suffered its biggest single-day loss in six years after cutting revenue guidance. "The reason why I'm not very positive about Apple's next cycle is because this phone is like, let's say, a small innovation cycle, but most importantly, the success of the [iPhone 12] is going to weigh on Apple's ability to sell phones next year," Ferragu added. Strengthened conviction New Street downgraded Apple in May , and Tuesday's iPhone event further strengthened its conviction that the stock price is going to drop. "The strong iPhone 12 cycle is consuming pent-up demand, rejuvenating the first-hand installed base, which will hamper demand for the next iPhone," Ferragu and his team wrote in a note to clients on Tuesday. "It is reasonable to expect consumer spending to shift away from electronics as the economy reopens, and we expect limited innovation in the next iPhone line up," they said, adding it is reasonable to expect a "lukewarm to cold consumer reception" for the iPhone 13 line-up. The global research house expects Apple to ship between 180 million and 200 million iPhones in fiscal year 2022, which is 15% to 20% below consensus. The U.S. tech giant reported fiscal third-quarter earnings in July and said at that time that iPhone sales increased nearly 50% on an annual basis to $39.57 billion.

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Expect a 'much weaker year' for Apple's iPhone in 2022, says analyst

Squawk Box Asia

Apple has launched a new cycle of iPhones — but one analyst is not sure if the latest devices will sell out in the coming year, and he's betting against the stock.