Is Apple Watch’s Fall Going to Impact Apple Stock?
Apple Inc. (NASDAQ:AAPL) devices can usually be counted on to at the very least make waves in the market on hype alone. From “iPhones” to “iPads,” Apple’s product lines aren’t always winners, but they are usually trendsetters with staying power that helps boost Apple stock.
But some analysts believe that the “Apple Watch” is headed for trouble as consumers appear to favor simpler wearables.
“Where smartwatches were once expected to take the lead, basic wearables now reign supreme,” said IDC Research, Inc. Senior Research Analyst Jitesh Ubrani in a press release. “Simplicity is a driving factor…” (Source: “Forget the Apple Watch…Consumers Want Simple Wearable Devices,” Barron’s, December 5, 2016.)
And the numbers bear that out. The wearables market saw a modest growth of about 3.1% in the third quarter compared to a year ago, hitting 23 million shipments, according to market research firm IDC. That may not blow your socks off, but smartwatches would kill for those numbers. Sales of smartwatches fell by 52% in the same period. This hasn’t killed Apple stock, but it’s not good.
Check out the numbers as reported by Barron’s:
Fitbit remained the market leader, with 5.3 million shipments in the third-quarter, growth of 11% from a year ago, per IDC. Chinese firm Xiaomi is second with 3.8 million. But GPS pioneer Garmin is gaining steam, with its own line of wearables. The business grew 12% in the quarter, with Garmin shipping 1.3 million wearable devices, according to IDC. It’s now the No. 3 player in the wearable category.
Of course, it’s worth mentioning that while Fitbit Inc (NYSE:FIT) looks good in these numbers, it has absolutely gotten killed this year, with FIT stock falling 73% since the beginning of 2016, whereas Apple stock has not fared nearly as poorly, of course, as it has diverse offerings.
A lot of the FIT stock downtrend is a result of potentially having tapped out the market for the device, but these numbers act as a provocative counter to that line of thinking, perhaps allowing for a Fitbit resurgence down the line.