Survey Shows Declining Apple (AAPL) iPhone User Retention Rates - Analyst

(Updated - December 4, 2019 10:20 AM EST)

Maxim Group analyst Nehal Chokshi reiterated a Sell rating and $190 price target on Apple (NASDAQ: AAPL) Wednesday after the firm's proprietary survey data showed declining iPhone user retention rates which increased the analyst's confidence in their negative outlook for the shares.

"Double clicking on our past 4 years of proprietary survey data shows a concerning rise of outflux of iPhone users to 9%, from 5%, of installed base, or in other words, a declining retention rate," Chokshi commented.

The survey showed that 9% of current iPhone users plan to switch away from the iPhone with an average time to switch of 2 years. This is up form 5% in 2017 and 6% in 2016. Meanwhile, iPhone influx will be equivalent to just 7% of the installed base, down from 13% in 2017 and 22% in 2016.

"While the declining influx is not necessarily highly concerning to a longer-term oriented investor, the elevated outflux of iPhone users, rising from the 5%-6% level in 2016 and 2017, to 9% in our 2019 survey suggests that the retention rate is declining, which gives us increased confidence in our Sell rating," the analyst explained.

In addition to concern about the iPhone retention rates, the analyst said further increases in nationalism within China remains a risk for the stock. "US-China elevated tensions are here to stay," the analyst reiterated.

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

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