Why Apple Stock Sank on Friday
Key Points
Rumors suggest Apple will soon unveil a new foldable iPhone.
Reports suggest the device faces production issues due to Apple's strict quality standards.
Apple is viewed as a premium device maker for a reason.
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Shares of Apple (NASDAQ: AAPL) got bruised on Friday, slipping as much as 3.2%. As of 2:00 p.m. ET, the stock was still down 2.2%.
The catalyst that sent the iPhone maker lower was a report that its latest product is facing production issues.
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Know when to fold 'em
One of Apple's most highly anticipated products is a foldable iPhone. Development of the device has long been rumored, and the latest whispers suggest the futuristic phone is in production, with a potential introduction at an Apple event scheduled for next week.
However, Nikkei Asia reports that the initial production run was limited to only a "few hundred" units per day of the next-generation devices. Apple is known for its high standards and strict quality control, and reportedly added an additional trial production run last month. As a result, "production is ramping up slowly."
Historically, Apple has unveiled new products in September, with devices shipping in time for the important holiday season. If the details are accurate, a low production volume might make it "challenging to meet market demand," according to the report.
Apple's positioning as a premium device has served the company well. A report released by Counterpoint Research last year noted that Apple captured 49% of all global smartphone revenue, despite shipping just 23% of all devices.
The company's unwavering focus on quality helps maintain its premium pricing in an industry notorious for budget devices and razor-thin margins.
It's important to remember that rumors are just that. Apple has a long history of defying reports suggesting the company wouldn't meet crucial deadlines. What's more, even if the stories are true -- and that's a big "if" -- Apple is better served to ensure it meets the company's stringent quality standards, rather than rush to meet some arbitrary deadline.
We wouldn't want a repeat of the "Bendgate" controversy that plagued the iPhone 6, now would we?
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Danny Vena, CPA has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.
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