Tech giant Apple (AAPL) has scrapped its plans to develop an iPhone hardware subscription service, a project that would allow customers to pay a monthly fee for yearly phone upgrades, according to Bloomberg. The effort, which would have worked like an app subscription billed to Apple accounts, faced multiple delays due to software issues and regulatory challenges. As a result, the team behind the project has been reassigned.
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The subscription service was part of Apple’s broader push to boost recurring revenue and strengthen its ecosystem, but it would have competed with carrier installment programs and disrupted existing Apple offerings, like the iPhone Upgrade Program and Apple Card Monthly Installments. Apple Pay Later, another in-house financial service, was also scrapped earlier this year after stricter regulations from the Consumer Financial Protection Bureau made it more difficult to manage.
Instead of navigating complex financial regulations directly, Apple has partnered with third-party firms like Affirm and Klarna to continue offering “buy now, pay later” options. While Apple could revisit the iPhone subscription model in the future through partnerships, it currently has no plans to relaunch the service on its own.
Investor Sentiment
Investor sentiment appears to be souring at Apple, as 1.3% of investors holding shares of AAPL decreased their positions. However, with shares trading near all-time highs, it is likely the result of some profit-taking or portfolio rebalancing. Indeed, out of the 774,865 portfolios tracked by TipRanks, 14.8% hold AAPL stock. In addition, the average portfolio weighting allocated towards AAPL among those who do have a position is nearly 15%. This suggests that investors of the company are still very confident about its future.
Is Apple a Buy or Sell Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on AAPL stock based on 20 Buys, nine Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 27% rally in its share price over the past year, the average AAPL price target of $243.72 per share implies 1.7% downside risk.
