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Apple’s Aggressive iPhone Trade-In Incentives Signal Major Impending Issues

iPhone XR

AAPL has been downward trajectory since the company released its Q4 earnings report earlier this month. At the time, Apple announced relatively flat iPhone sales, although the average selling price (ASP) was way up due to a heavy mix of ultra-expensive iPhone X smartphones.

However, investors were concerned that we may have reached “Peak iPhone” and that there may be some stagnation in iPhone sales going forward. Apple unwittingly helped to fuel these concerns by announcing that it will no longer report device sales (including iPhones, iPads and Macs) during its quarterly reports going forward. Wall Street can’t keep a close eye on iPhone sales trajectory if the Apple isn’t providing hard numbers. 

aapl chart

Apple is further getting piled on with reports coming out of China that its suppliers are seeing reduced orders for components due to lower sales forecast. The “entry-level” iPhone XR is reportedly underperforming — likely due to its starting price of $749 — and that the iPhone XS Max — which is priced from $1,099 — is reportedly outselling all of the new 2018 iPhones.

All of this bad news has sent AAPL from a high of around $230 in October — before the company’s November 1st earnings report — to its current state at around $176. At its peak, the company surpassed the $1 trillion mark in valuation, and now it has settled back down to a market cap of “only” $835 billion.

Apple iPhone Xs line up 09122018

Apple doesn’t [often] respond to rumors about its sales performance or supplier woes, but the company is making a move that is an effort to boost iPhone sales across the board. The company is now offering up to an additional $100 trade-in bonus on older iPhones dating back to the iPhone 6.

The iPhone 6, iPhone 6s, and iPhone 6s Plus see the biggest increases ($100), with current trade-in values listed at $200, $200, and $250 respectively. Other trade-in credit increases include just $25 (up to $300 from $275) for the iPhone 8 and $75 for the iPhone 7 (up to $250 from $175). Each of these trade-in values is likely far lower than what you could manage by selling them outright via Craigslist or eBay, but taking the phone to an Apple Store is far less of a hassle.

apple trade in

Besides, most customers want an easy purchase experience without having to jump through hoops, so the opportunity to quickly trade in their device and put that cash towards a new iPhone XR or iPhone XS is quite compelling. Apple isn’t a company that often resorts to discounts or special promotions to boost the sales of relatively new hardware, but tough times call for stepped-up measures.

Apple was also in the spotlight earlier this week when Present Donald J. Trump asserted that iPhone users could “very easily” absorb a 10 percent increase in prices if he decides to go forward with further tariffs on electronic goods manufactured in China.



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