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Apple stock down on early reports of weak iPhone X demand

iPhone X preview
iPhone X preview 06:23

Apple's stock (AAPL) fell nearly 3 percent on Tuesday on reports of weaker-than-expected demand for the company's iPhone X.

Some analysts are lowering expectations for shipments of the newly debuted model, which carries a hefty price tag: The iPhone X starts at $999 in the U.S. for the 64GB model (£999 in the U.K. or AU$1,579 in Australia), while the 256GB iPhone X costs $1,149, £1,149 or AU$1,829.  

Analysts at Sinolink Securities and JL Warren Capital slashed their outlook for shipments in the first quarter of 2018 by several million apiece, Bloomberg reported Tuesday, citing fewer orders to Apple's suppliers and weaker-than-expected demand. 

Taiwan's Economic Daily News cited unnamed sources who said Apple was cutting expectations for the iPhone X to 30 million units sold in the quarter rather than 50 million, Reuters reported Tuesday.

New features on iPhone X 02:41

"As we approach the holiday season, we expect it to be our biggest quarter ever," Apple CEO Tim Cook said in the company's fourth quarter earnings call last month. He added that the company is increasing its iPhone X production capacity every week. In the earnings release, Apple forecast revenue for the current quarter in a range of $84 to $87 billion. Analysts, who had factored in some challenges keeping up with demand, expect $85.2 billion, according to FactSet.

The Cupertino, California-based company is relying on the new iPhones to give it a boost. More than two-thirds of Apple's sales come from its popular phone, but iPhone sales dropped for the first time last year, partly due to consumers holding off on upgrading their phones and an overall slowdown in the phone market.

Last year marked the slowest growth rate for the phone industry since it began, and Apple's iPhone sales dropped for four straight quarters. Total industry shipments rose 2.5 percent to 1.47 billion, according to IDC, and they should increase only 1.7 percent this year. The firm expects phone shipments to keep growing through 2021.

Slow iPhones 01:56

Many analysts believe Apple can pull off the juggling act. They are expecting the company to sell 242 million iPhones in the fiscal year ending in September 2018 — the most in the product's history. The previous record was set in 2015 when Apple shipped 231 million iPhones, thanks to larger models introduced just before the fiscal year began. By comparison, Apple shipped nearly 217 million iPhones in its just-completed fiscal 2017.

If Apple falters, investors are likely to dump its stock after driving the shares up nearly 50 percent this year to around $170 on the expectation that the iPhone X will be the company's biggest hit yet. Earlier this week, Barron's issued a call that Apple would hit a record $1 trillion stock market value in 2018, citing earnings strength, sales growth in China and possible benefits from the U.S. tax overhaul

The stock still has a ways to go -- its current market cap is around $876 billion -- and lower than expected iPhone orders could slow its ascent. Another risk to watch out for is the possibility of a major market correction in 2018, after a record-breaking year for many U.S. indices.

CNET contributed reporting to this story.

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