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Why the iPhone 6S is Vital to Apple Shareholders

When I’m feeling down, I normally go grab a burrito bowl from Chipotle and throw on some John Mayer to feel better. When Apple’s ( AAPL) stock is down nearly 15% just a few weeks after approaching new highs, the Cupertino-based tech giant likes to release a new iPhone.

Fine, Apple isn’t releasing a new phone every rainy day, but its recent performance on the market has investors desperate for a kick start. Apple is looking to provide just that with the rumored unveiling of the new iPhone 6s at the company’s keynote event on September 9 (also read What to Expect from Apple's September Keynote).

What We’re Getting

While Apple doesn’t comment on unannounced projects, several rumors and reports give us a good idea of what is coming with the 6s. As is typically the case with the “S” versions, the iPhone 6s will be more of an update than a new model. The main features include an updated front and rear camera and the implementation of Apple’s new haptic feedback technology, “Force Touch.”

The bigger story is really what isn’t in the new iPhone. The phone will not have a new tougher glass screen, and it will also be missing Apple’s newly patented technology that turns the device right-side up when it’s dropped. Apple may be holding these back for a future release down the line.

Why it Matters

IPhone launches have become somewhat of an expectation these days, and we can generally predict a September reveal and launch. Although investors may know when a launch is coming, this particular launch is a bit more important than usual.

Apple’s stock has been slumping and needs rejuvenation, but that isn’t the only reason the company needs a strong iPhone 6S launch. To ensure the long-term prospects of the stock, Apple needs to blow away analysts’ sales expectations.

IPhone sales are vital for Apple, accounting for 63% of the company’s total revenue. And the iPhone has always had an impressive history of growth. If current estimates hold up, Apple will sell 231 million devices in FY2015, which would represent a year-over-year growth of 36.6%.

However according to FactSet, Apple is in for a dangerous FY2016. FactSet compiled estimates from 31 analysts, finding an average expectation of 235 million iPhones sold in 2016. This is just a 2% growth from this year’s estimated numbers, and it brings Apple shockingly close to a decrease in iPhone sales for the first year ever.

In addition to possible slumping phone sales, Apple investors have cause to be concerned about several other products. In its latest earnings report, Apple chose not to highlight the sales numbers of the Apple Watch, leading some to speculate that they may have been lower than expectations. Also, Apple has noticed that iPad owners tend to upgrade at a much lower rate than that of iPhone users, causing the company to seek out corporate partnerships to boost sales.

Bottom Line

For years, Apple has been one of Wall-Street’s favorite picks. The company almost always outperformed and seemed a stable investment for everyone. Only recently have serious concerns about the company emerged, and just because these concerns are new does not make them baseless.

Apple needs to come out swinging in its upcoming keynote, and the launch of the iPhone 6s has to be a big one. If sales of the new model can get off to a good start, Apple may be able to jump ahead of the sluggish expectations early. This should give investors the confidence to overlook some of the other shaky signs.

Currently, Apple has a Zacks Rank #3 (Hold), and its stock has been volatile over the past week or so. All eyes will be on the keynote on September 9, as the company looks to initiate a big turnaround.

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