Will Lines at Apple Stores Predict iPad Sales and the Direction of Apple’s Stock?

The buzz around Apple’s (NASDAQ:AAPL) iPad has been tremendous, but will it translate to sales?  Analyst Gene Munster of Piper Jaffray is paying attention to lines forming at Apple stores to gauge the potential of the iPad.

We believe that lines at Apple Stores are likely to be a poor indicator of demand this time around (compared to the iPhone launch).  Below we highlight why the lines may be deceptive, how apps will drive demand over the long run and how there could be a small upside (<2%) our $267 Trefis price estimate for Apple’s stock if the more aggressive iPad unit forecasts materialize.

Lines Will Understate Demand

We believe that lines at Apple Stores will understate demand significantly due to the absence of any perceived iPad scarcity amongst buyers and the familiarity of many potential iPad early adopters with the basic functionality of the iPad through use of iPhones, iPod Touches and Macs.

We believe that demand for the iPad will develop over time as new iPad-specific apps convince existing iPhone and iPod Touch owners of the complimentary value of the iPad.

First Wave of iPad Apps Out

TechCrunch has already debuted some of the most notable iPad app launches such as the:

• Netflix App: Netflix subscribers with access to Netflix streaming can watch some films and TV shows instantly on their iPad
• NY Times App: NYT has introduced a free iPad app (ad supported) and has plans to introduce a paid one (likely ad free) in the future

iPad apps that take advantage of the device’s large screen with games and video will be important for driving demand.

3 – 7 Million iPad Unit Sales

Some of the most recent iPad unit sales forecast from analysts fall into a wide range.  Piper Jaffray’s Gene Munster estimated a least 2.8 million iPad unit sales in 2010 while market research firm iSuppli estimates 7 million iPad unit sales.

Morgan Stanley’s Katy Huberty estimates 6 million iPads sold in 2010 with 8-10 million iPads shipped by suppliers during the year.  In comparison, we estimate that Apple will sell 4 million iPad units in 2010 and show you our full, modifiable, iPad forecast below.

Even if the higher end of iPad unit sales estimates were to materialize, there would be less than 2% upside to our $267 Trefis price estimate for Apple’s stock.  What do you think?  Modify our forecast above to see what the impact of higher or lower iPad unit sales could be on Apple’s stock.  You can also use the “Trefis Price” menu above to see what the Trefis community thinks.

For additional analysis and forecasts, here is our complete model for Apple’s stock.