Is the Vision Pro selling like hotcakes and can it become Apple's "savior" in the future?

Zhitong App noticed that Apple, as one of the world's largest high-tech device manufacturers, has faced investor scrutiny in recent years due to its failure to launch a blockbuster product. Apple's first virtual reality headset, Vision Pro, is widely seen as a potential breakthrough and could be its biggest product release since AirPods.

Surpassing encouraging demand trends

Pre-orders for Apple Vision Pro started on January 19th, with a starting price of $3,499 for the 256GB version. In comparison, Meta Platforms' latest AR headset, Oculus Quest 3, starts at $499 for the 128GB version. When Apple Vision Pro was released in June last year, its high price raised concerns, but the initial pre-order data showed strong demand.

Renowned Apple analyst Ming-Chi Kuo stated that Apple sold between 160,000 and 180,000 units of Vision Pro during the first pre-order weekend, indicating that the device sold out as expected within the first weekend. As observed and reported by analysts, the estimated shipping time for all Vision Pro devices immediately extended to 5 to 7 weeks after pre-orders were enabled, clearly indicating that Vision Pro is sold out.

However, there is a significant difference between the popular iPhone models and Vision Pro. Typically, the shipping time for iPhones steadily increases within the first 48 hours after pre-orders start, but the shipping time for Vision Pro remained stable within the first 48 hours after the initial surge. Kuo sees this as a warning sign.

Apple has a group of passionate followers who line up to purchase new devices upon release. A sensational product can not only attract a strong fan base but also appeal to the general public. After the initial frenzy, demand for Vision Pro gradually weakened, indicating that VR headsets have not yet captured the interest of mainstream tech consumers.

AR/VR market still has room for growth

Evidence shows that although Apple does not have a first-mover advantage in various consumer tech fields such as smartphones, personal computers, and smartwatches, it has achieved tremendous success in actively gaining market share. Apple's success lies in its ability to develop attractive tech products based on a deep understanding of consumer preferences.

Currently, the AR/VR headset market is in its early stages, with IDC forecasting shipments of only 8.1 million AR/VR devices in 2023. According to Counterpoint Research, Meta dominated this market in the third quarter of 2023, accounting for 49% of all device shipments. Counterpoint's data shows that due to the lack of notable headset releases, headphone shipments in the third quarter decreased by 29% compared to the previous year.The Size Issue for Apple

Since the release of the first iPhone in 2007, Apple has experienced rapid growth. However, due to its large scale, Apple has struggled to meet Wall Street's growth expectations in recent years. In comparison, in the 2023 fiscal year, total revenue decreased by nearly 3% YoY to $383 billion, and net profit also declined by 2.8%.

The problem with Apple's large scale is that, from a financial performance perspective, it needs a highly successful product to drive its growth. By 2024, Apple expects to sell 500,000 units of the Vision Pro, generating at least $1.75 billion in revenue. While this may seem encouraging on its own, it appears insignificant compared to Apple's expected revenue of nearly $400 billion this year.

Even if Apple's sales of the Vision Pro in 2024 were double the projected amount, this product would still account for less than 1% of the company's total sales this year. Based on this understanding, it can be concluded that the Vision Pro will not have a significant impact on Apple's fundamentals in the foreseeable future.

However, if this year's sales exceed Wall Street's expectations, this highly anticipated VR headset could improve the market's perception of Apple and solidify its position as a technology innovation leader.

Is Apple Stock Worth Buying, According to Wall Street Analysts?

Apple is one of the most sought-after companies in the market. As expected, Wall Street analysts often have differing opinions on Apple's prospects, but overall, they are optimistic. With 22 buy ratings, 8 hold ratings, and 1 sell rating in the past three months, the stock has received a "moderate buy" consensus rating. Here are some analysts' evaluations of Apple.

On January 18th, Bank of America Securities upgraded its rating on Apple and raised the target price from $208 to $225, citing the company's promising AI product roadmap and improving prospects in the services sector, among other positive news. Bank of America also claimed that in the long run, as VR becomes mainstream, sales of the Vision Pro may eventually surpass that of the iPad.

On January 23rd, Bank of America included Apple in its US 1 List, which is a collection of the bank's best investment ideas.

In Morgan Stanley's weekly report released on January 22nd, Apple was identified as one of the highest-quality growth stocks in the US, with 56 other companies seemingly well-positioned to achieve alpha returns this year.

Last week, Piper Sandler ranked Apple as the third most attractive stock among the top 7, only behind Alphabet (GOOGL.US) and Meta Platforms.