AAPL Down after Vision Pro Launch and Analyst Downgrade

Shares of the tech giant, Apple (NASDAQ: AAPL) continued to be down in morning trading at the time of publishing on Tuesday even as the company’s launch of its Vision Pro headset at its annual Worldwide Developers Conference (WWDC) event on Monday created ripples in the market, ending months of speculation that AAPL was going to launch an augmented/ virtual reality headset.

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AAPL also unveiled some new health features in iOS 17, iPadOS 17, and watchOS 10 at its WWDC conference. These features include more mental health features that would allow users to log their emotions and daily moods, and access evaluations and resources. The company’s iPhone, iPad, and Apple Watch will include features related to vision health to encourage behaviors related to healthy vision and reduce the risk of myopia (nearsightedness).

Industry executives have welcomed Apple’s move into the VR/ AR market, calling it a ” watershed moment for the industry.” However, Cher Wang, Taiwanese tech giant HTC’s CEO in a conversation with CNBC, cautioned that the tech giant’s “closed” ecosystem could be a hindrance for developers.

Wang stated, “Apple has historically used a closed ecosystem for their iOS products and content distribution platforms, which could be limiting for developers in a new value chain. If developers are locked into one ecosystem, it’s difficult for them to maximize their reach.”

AAPL’s Launch of Vision Pro Could Spell Trouble for META

The launch of Apple’s new mixed-reality headset means that the company will compete head-to-head with Mark Zuckerberg‘s Meta Platforms (META). META is expected to launch its mixed-reality Quest headset later this year.

Facebook ventured into the AR/VR market nine years back after the acquisition of VR headset startup Oculus for $2 billion. According to a CNBC report, Meta has cornered a major market share of the headset market, ahead of its rivals like Sony, HTC and Magic Leap in headset sales. 

Meta is already pumping in billions of dollar into the development of the underlying mixed reality technologies – the development of the Metaverse.

Analyst Downgrades AAPL after Launch of Vision Pro

Top rated DA Davidson analyst Tom Forte downgraded AAPL to a Hold from a Buy and lowered the price target to $185 from $193 following the launch of the Vision Pro headset. Forte’s price target implies an upside potential of 3% at current levels.

The analyst commented, “We are downgrading shares on our belief that any good news from the AR/VR [augmented reality/virtual reality] product launch is already reflected in the share price.”

Forte underlined some major hurdles that could arise when it comes to the adoption of the headset including the high price tag (around $3,499) and questioned whether consumers would buy this headset when they could buy a combination of high tech gadgets at a much lesser price.

The analyst added, “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.”

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Analysts are cautiously optimistic about AAPL stock with a Moderate Buy consensus rating based on 21 Buys, six Holds and one Sell.

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