Apple: How Will China iPad Launch Affect the Stock Price?

Oct. 5.10 | About: Apple Inc. (AAPL)

Apple (NASDAQ:AAPL) recently launched iPad in China for a price of $586 for a 16 GB Wi-fi model and $822 for a $64 GB model. Apple also launched iPhone 4 recently in China and sold around 100,000 iPhone 4 within the first four days of its launch, according to the IDG News Service. We estimate that if Apple iPad mirrors the success of iPhone in China, there could be an upside of more than 1% to the Apple’s stock.

Potential upside to Apple’s stock

iPad constitutes around 8% of the $361 Trefis price estimate for Apple’s stock. In another article, we had estimated the upside to Apple’s stock due to the early iPhone 4 launch in China. In the same article, we also estimated that iPhone revenue from Greater China (China, Hong Kong and Taiwan) constitutes around 12% of the worldwide iPhone revenues. We expect around 15 million iPads worldwide in 2011.

Considering the same success ratio for iPad as that of iPhone in China, Apple could sell 1.8 million iPads in 2011 in China alone. Hence, Apple could sell 16.8 million iPads in 2011 worldwide, instead of 15 million that we forecast.

This scenario could generate 1% upside to the $361 Trefis price estimate for Apple’s stock.