Apple briefly became the first $900bn (€772bn) in the US on the day its stores around the world were inundated with customers trying to get their hands on the new iPhone X.
Demand for the handset, which boasts a facial recognition system, an edge-to-edge display, and a price tag starting at $999 (€857), has prompted Apple to predict record sales of at least $84bn in the Christmas quarter. The shares gained as much as 3.7% to $174.26, briefly tipping Apple’s market capitalisation above $900bn.
“Apple is taking the iPhone franchise to a whole new level with the iPhone X, pushing the company deep into the ultra-luxury smartphone market with the highest priced iPhone in the company’s history,” Drexel Hamilton analyst Brian White wrote in a note to clients. “We believe Apple has attractive upside over the next 12 months,” he said.
Apple shares have climbed almost 50% this year on expectations for the iPhone X, which comes 10 years after the original iPhone was released. Even with those gains and the record valuation, Apple still trades at 19 times earnings. That’s a discount to Google parent Alphabet, which trades at 31 times earnings, Netflix, which trades at 200 times earnings, and Amazon’s 277 price-to-earnings multiple.
Hank Smith, chief investment officer at Haverford Trust, said that unlike those other companies, Apple has to convince consumers to buy a new phone annually. “They have to sell millions of phones each year, so there’s always a chance those sales can come in late,” he said.
Queues formed outside Apple stores across the world as fans flocked to buy the new iPhone X, signalling stronger demand than the last two versions. Investors and analysts took the surge of interest, alongside a better-than-expected sales forecast as positive signs. In Australia, around 400 people queued outside Apple’s main store in central Sydney to pay $1,218 for the new phone. Just 30 had turned up for the September release of the iPhone 8, an incremental update of the iPhone 7. In Apple’s Omotesando store in Tokyo, 550 people were waiting in line.
In Europe, Apple stores in Amsterdam, Berlin and London saw lines of several hundred fans, while smaller, more subdued crowds were observed at stores in Frankfurt and Paris.
In Hong Kong, newly purchased iPhone X phones were reselling for $1,512 soon after sales began, but the price quickly fell, a trader told Reuters. In mainland China — where Hong Kong traders often sell newly purchased goods — the anniversary model’s starting price is $1,267.
The rush of interest in the new phone came after Apple issued an upbeat sales forecast for the year-end US shopping season this week. The queues signalled the company was “on track for a pretty good replacement cycle” said Edison Investment Research analyst Richard Windsor, but he questioned whether the new model sales will be as large as prior iPhone upgrade cycles.
“We do not think that the iPhone X will offer a cycle nearly as big as the iPhone 6 and my concern is that this is what the market is looking for,” said Mr Windsor. Supported by resurgent iPad and Mac sales, the 10-year anniversary iPhone will help push revenue to a record high of $84bn to $87bn in the quarter ending in late December, Apple said earlier this week
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