Apple stock fell nearly 1% on Monday after the release of its highly anticipated Vision Pro virtual reality headset that one analyst said was costlier than anticipated and overhyped.
The Vision Pro unveiling created a sell-the-news event in Mondays trading, as is typical for a product launch of its scale, KeyBanc analyst Brandon Nispel wrote in a research note to clients on Monday, saying the hype leading into the event felt well overdone.
Buy the rumor, sell the news is an investment adage of traders who sometimes try to profit from market volatility in the period leading up to and immediately following major news events. Breaking news has a short-lived impact on stocks, so traders often buy securities based on preannouncement speculation and sell after the news becomes public.
In the week preceding the headsets launch, Apples stock rose over 4%, reaching a new high of over $184 in midday trading on Monday before going into reverse. Just after noon on Tuesday, Apples shares were at $178.52.
Nispel said Vision Pro is far from the next iPhone, given its battery and network limitations, but speculated it could replace computer monitors and TVs for some consumers. He also predicted Apple will get little short-term revenue gains from the headset, which isnt expected to be available until early next year.
With the devices retail price of $3,499, we expect an immaterial contribution to AAPLs revenue assuming a couple hundred thousand units, Nispel wrote. Vision Pros base price is three times higher than Metas competing premier model, and its uncertain whether Apple can gain traction over established cheaper products.
But Nispel added that Apples headset has the ability to create a unique, hard-to-replicate platform.
KeyBanc currently rates Apple as overweight, with a $180 target price, which it has not changed since the headsets launch.
Apple pitched Vision Pro as a whizbang tool for the entertainment industry, including video game and movie studios, that gives it an entirely new way to reach consumers. Disney CEO Bob Iger even appeared on stage during Apples event to tout his companys partnership with Apple to provide Disney+ streaming through the headset.
Though it is too early to forecast Vision Pros impact on the entertainment industry, Nispel wrote that the partnership brought to life AAPLs vision (no pun intended).
The research note called Vision Pro a solid foundation of a next-generation entertainment and work platform that could break ground in spatial computing, the term Apple used to describe the new category it has entered. Spatial computing is technology that lets users interact with 3D digital spaces and objects. While Vision Pro is not the first augmented reality deviceMeta and Sony have released similar products for yearsApple has an advantage because its headset can be integrated with other hardware, software, and services, Nispel wrote.
