Apple may stay ‘range bound’ in near-term amid mixed bag of news: Jefferies

A plethora of Apple (NASDAQ:AAPL)-related news has cropped up in recent days, but given the mixed nature, shares of the tech giant are likely to remain “range bound” in the near-term, Jefferies said.

Shares were little changed in premarket trading on Thursday.

Analysts at the firm noted that two Chinese provinces (Jiangsu and Quizhou) introduced government subsidies — as high as 15% — on smartphones and other consumer electronics, with one of them not excluding Apple products. “We expect the subsidy program to expand over time — it is a way for China to counter impact from potential hikes in US tariffs,” the analysts added.

While Jiangsu’s program is set to expire by the end of 2024, the analysts posited it could be extended “if the impact is positive.” Additionally, the subsidy program could be expanded to other provinces. “It would make sense for China to include Apple in the subsidy program, in our view, as an incentive for the [Apple] supply chain to maintain capacity in China, as a way to counter a potential US tariff hike,” the analysts wrote.

Flip side of the coin

While government subsidies may stoke demand, some media reports have indicated that the thinnest version of the upcoming iPhone 17 — often referred to as the iPhone 17 Air — may not have a physical SIM. This could impact its sales in China, and thus result in only three iPhone models being sold in the country, the analysts added.

“Our supply-chain checks indicate this is possible, but still uncertain, since a thinner model means the battery will have to be thinner, but larger, leaving less space for any SIM slots,” the analysts wrote in a note to clients. “China adopts a real-name registration system for all mobile users, so the three telcos do not support eSIM (except for Apple Watch & iPad). Moreover, Chinese consumers are used to having dual-SIM phones, since many of them use two SIM cards to take advantage of cheaper data plans from telcos without having to change their phone number (which is important for voice calls & Internet transactions (verifications based on SMSs)).”

Other potential drivers of the stock include further news on U.S. tariffs, an update on Apple’s search deal with Google (GOOG) (GOOGL) as a result of the antitrust case against the search giant and additional clarity on President-elect Trump’s policy on antitrust.

However, the analysts added that none of these “would be big enough to swing the stock in a single direction.”