Apple Share Price Plummets Because iPhones Are Too Expensive

Three financial firms downgraded the company’s stock after it debuted two new phones Tuesday

Apple’s share price has fallen 5 percent Wednesday as Wall Street firms expressed disappointment in the company’s new iPhones, which were unveiled the day before. Financial firms Credit Suisse, Bank of America and UBS all downgraded Apple’s stock after the presentation, and even those that kept their faith in Apple expressed concern.

While splashy new product presentations have been a central part of Apple’s business for years, the latest disappointment stems from outsized expectations that went unfulfilled. Analysts and technology industry experts presumed Apple would unleash a cheaper phone that would help the company compete with the likes of Samsung.

While Apple’s upcoming iPhone 5C will be cheaper than past iPhones — retailing for as little as $99 in the United States – that low price only applies to those who buy an expensive data plan. Moreover, the phone will still cost more than $700 in China, one of Apple’s most important markets.

Also read: Apple Unveils 2 New iPhones: Cheaper, Color and 64 Bits

“We remain disappointed with Apple’s decision to remain a premium-priced smartphone vendor, and this continues to competitively expose the company and limits its total addressable market and growth,” Credit Suisse wrote.

Apple has had a rough year to-date, as its stock has fallen more than 70 points since the start of the year. However, it had been rebounding from a nadir of 390.53 on April 19, rising as high as 507.74 August 19.

Yet Credit Suisse analyst Kulbinder Garcha wrote in a note that Apple’s share of the smartphone market would continue to slide.

“Rather than offer attractive pricing for consumers, and move the iPhone 5C into a new and growing price segment, Apple retained a premium pricing strategy,” Garcha said.

Comments