Apple’s ‘Sell-Through’ Market Share Erodes, UBS says

The world’s most valuable company saw its smartphone market share in China shrink in May, even after “deep” discounting, according to UBS analysts citing Counterpoint Research. Apple is also struggling in the US market. 

UBS analyst David Vogt wrote that Apple’s iPhone sales have lost market share despite heavy discounting in China. In May, iPhone “sell-through” declined by 2% year-over-year (YoY), marking the fifth consecutive monthly decline.

The sell-through market share in China fell to 15.3% from 16.9% YoY.

The sell-through market share in the US also fell. 

Europe was unchanged. 

“Importantly, heavy discounting by Apple in China tied to the “618” e-commerce festival was not enough to mitigate share loss in the region,” Vogt said. 

He estimated that “iPhone sell-through in China was largely flat YoY during May-24 in a market that grew 11% YoY.”

“While Apple bulls may note the data is backward-looking and is not likely indicative of Apple’s AI smartphone opportunity next year, we note that iPhone share loss to Huawei and other Chinese OEMs acts as a material governor on iPhone unit growth,” the analyst continued. 

Vogt warned: “Given Huawei’s refreshed product line-up, this tailwind for Apple is unlikely going forward.” 

What’s troubling for Apple is that iPhone market share across major markets is sliding, except for India.  

Vogt noted that he had a Neutral rating and a $190 price target on Apple:

Our Apple $190 price target is 27x our CY25/CY26e EPS reflecting a challenging growth backdrop, higher rates, and undefined AI strategy. At 27x, Apple would be trading at a 30% premium to the market, roughly in-line with the trailing 5 year average.

In the markets, Apple shares soared to new highs of $220 per share, pushing its market cap to nearly $3.34 trillion, making it the most valuable company in the world, surpassing even Nvidia. Stock buybacks have played a significant role in driving equity prices to these new heights. 

Meanwhile, Jefferies analysts said iPhone discounts have helped the company reverse its underperformance in the Chinese smartphone market. The bank, which raised its price target to $215 from $200, said that Apple recorded robust numbers during 618.

Apple shares trade at a slight premium to the 12-month average price target of Wall Street analysts tracked by Bloomberg.

Apple’s recent introduction of Apple Intelligence “will position the company as the leader in the consumer AI experience,” Oppenheimer analyst Martin Yang wrote in a note.

However, Goldman’s chief equity strategist David Kostin warned in a note this week that AI companies face a brutal earnings day of reckoning in this upcoming earnings season.