Apple investors just got some terrible news

Apple (AAPL 3.71%) shareholders are holding on to a successful iPhone 16 launch. Otherwise, the stock could be in trouble. Apple shares currently trade at a premium despite weak growth prospects, but the iPhone 16 could change all that.

However, Apple investors received some disturbing news about the iPhone 16, which could spell disaster for the company’s stock.

iPhone 16 pre-orders are reportedly disappointing

TF International Securities analyst Ming-Chi Kuo monitors several key Apple suppliers to gauge iPhone pre-orders. The iPhone 16 was announced last week, meaning this is the first weekend of availability of pre-order data, which is key to determining overall demand. iPhone demand has been fairly weak over the past few years, with sales barely changing year-over-year. Unfortunately for investors, this trend is starting to head in the wrong direction.

According to Ming-Chi Kuo and his sources, iPhone pre-orders are down about 13% year over year. This is bad news for Apple investors as they needed a successful iPhone 16 launch to justify the current stock price.

So is it time to panic sell? Not necessarily.

There are a few factors at play. First, this is vendor-sourced information and may contain errors. If this information came directly from Apple, it would be a different story. Second, part of the appeal of the new iPhone 16 is that it could support Apple Intelligence, Apple’s approach to generative AI. However, some of these features aren’t expected to be available until October, after the iPhone 16 is available to the general public.

So, there is still hope that the iPhone 16 launch will be a success, but I would like to warn investors to wait until the end of this year’s holiday season to judge its success or failure.

But one thing is beyond dispute: Apple needs the iPhone 16 to succeed.

Apple’s growth has been weak for almost two years

Apple is one of those stocks that trades based on historical strength rather than current performance. Apple has not seen any significant revenue growth since 2022.

AAPL Revenue Data (YoY Quarterly Growth) by YCharts

Apple’s revenue is still down from the peaks it reached in 2022, but its stock price has risen significantly since then. That’s partly due to improved profit margins and share buybacks boosting earnings, but the price investors have to pay for Apple stock has also risen.

AAPL P/E (Forward) data by YCharts

While investors could once buy shares for in the mid to high 20s, that is no longer the case. At more than 32 times forward earnings, Apple shares trade at a significant premium to the broader market’s 23.7 times forward earnings (measured S&P500).

When a stock has such a large advantage over the broader market, it needs to grow profits quickly, and that requires strong revenue growth.

While Apple Intelligence and the iPhone 16 were supposed to provide that to Apple, early signs suggest that it won’t work. As investors receive more official data, it could trigger a bigger sell-off in the stock. Until then, Apple is still a very expensive stock that trades on the promise of future success. There are other stocks that are much cheaper and have a clearer path to success than Apple, and investors should consider moving capital into them rather than Apple.

Keithen Drury has no position in any stocks mentioned. The Motley Fool has a position in and recommends Apple. The Motley Fool has a disclosure policy.