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Wall Street analysts discuss Apple Vision Pro as 'hefty' price pushes shares lower

Published Jun 06, 2023 06:50
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Apple (NASDAQ:AAPL) shares trade nearly 3% lower in pre-market Tuesday after the Cupertino-based company launched its much-anticipated mixed reality (MR) headset, which comes at a higher-than-expected price of $3,499.

“Today marks the beginning of a new era for computing,” said Tim Cook, Apple’s CEO.

“Just as the Mac introduced us to personal computing, and iPhone introduced us to mobile computing, Apple Vision Pro introduces us to spatial computing.”

Here’s what analysts have to say about yesterday’s presentation and Vision Pro’s impact on Apple’s financials and stock.

Oppenheimer analysts: “Management sees the headset device as a revolutionary product and the next step in interactive consumer experiences.”

CFRA analysts: “Although we are impressed by its best-in-class hardware/immersive capabilities, we think AAPL failed to identify why it's a must-own device for consumers, at least for now. Still, the company's entry into the space and greater engagement from developers will help support adoption and new use cases over time."

Goldman Sachs analysts: “We're encouraged by the long-term growth contributions from the headset and Vision Pro app ecosystem, but expect near-term financial contributions to be limited as (1) the relatively high retail price point may limit near-term adoption; (2) previous media reports suggest the headset may be sold at breakeven; and (3) a relatively smaller installed base limits contributions from additional services revenue.”

Needham & Company analysts: “The fact that DIS CEO Bob Iger was on stage touting AAPL's Vision Pro googles demonstrates the compelling strategic fit between DIS's content and AAPL's wearable technology. At $3,500, we expect adoption to be slow. However, if AAPL buys DIS, its storytellers could create unique content to drive consumer adoption of AAPL's Vision Pro goggles, we believe.”

BofA analysts: “While we believe MR has the potential to drive Services revenues higher via a new set of premium Apps (Vision Pro will have its own App Store) the adoption will take time.”

Bernstein analysts: “The device is shipping later and is more expensive than anticipated, and will likely be immaterial to Apple's financials for at least a couple of years. While we see potential for it to be material financially over time (perhaps $50B within 5- 10 years; less than 10% of revenues), we also believe that it could cannibalize other Apple hardware offerings.”

Wells Fargo analysts: “We expect investors to debate the commercial success/model implications of the new platform… As expected, Apple is [pursuing] a premium pricing strategy with Vision Pro retailing at $3,499 vs. Meta's Quest 2 at $300 (Quest 3 at $500 shipping this fall). While we think some investors may question consumer demand elasticity at a ~$3,500 price point, we think Apple will drive consumer AR/VR adoption by pursuing a high-spec'd headset (23 million pixels vs. Quest Pro at 1800x1920 pixels).”

KeyBanc analysts: “While the technological capabilities look great, the product looks more like a replacement of TVs and monitors, and we wonder what network characteristics are needed to support the use. With the device's retail price of $3,499, we expect an immaterial contribution to AAPL's revenue assuming a couple hundred thousand units, though we do believe the product supports the view that AAPL has a superior ability to integrate hardware, software, and services to create a differentiated platform that competitors are likely to find difficult to replicate.”

Deutsche Bank analysts: “We are impressed with the capability and performance of AAPL's revolutionary AR/ VR platform that seamlessly works with the rest of the Apple ecosystem, and we see it significantly expand the use cases of AR/VR at home, at work and during travel… While we are excited with the new AR platform, we believe the hefty price tag will likely limit the adoption of the device.”

Wedbush analysts: “We believe ultimately Apple is now building out its own AI ecosystem within its iOS developer community starting with the launch of this product that will lead to more applications and use cases over the coming years. While the knee jerk reaction from investors will be around near-term expectations, we believe this is further building a developer moat for Apple which remains its golden installed base and Apple ecosystem.”

Evercore ISI analysts: “Extremely impressive product demo and use cases – the time frame to market and apps being built will be key. We think this is the beginning to start of the next shift in compute… We see dual cases across productivity and entertainment making the higher ASP more acceptable, especially as apps get built around this.”

DA Davidson analysts (downgraded the AAPL stock to Neutral): “We are downgrading shares on our belief that any good news from the AR/VR product launch is already reflected in the share price. In addition, we believe there are important structural challenges for Apple when it comes to consumer adoption of AR/VR hardware, which could limit the near-term impact on its sales and profitability.”

Apple stock is up 38.2% year-to-date based on Monday’s closing price.

Wall Street analysts discuss Apple Vision Pro as 'hefty' price pushes shares lower

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