Apple stock (NASDAQ: AAPL) went on one of its biggest slides of the year after analysts downgraded the shares, saying the new iPhone 5C is not cheap enough for emerging markets and the company is failing to innovate.
Bank of America-Merrill Lynch downgraded Apple (AAPL) to "neutral" from "buy." Similar actions were taken by analysts for Credit Suisse, Piper Jaffray and UBS.
Apple's stock fell 5.7 percent, or $28, mid-day on Wednesday to $466.64.
During Tuesday's highly-covered media event, Apple introduced two new phones with features such as a fingerprint sensor and new operating system, iOS 7. The new iPhone 5S comes in various metallic shades while the cheaper iPhone 5C comes in five plastic colors.
"You are going to be blown away by how rigid and great it feels in your hand," said Phil Schiller, Apple's vice president of marketing of the iPhone 5C at company headquarters in Cupertino, Calif.
UBS analyst Steven Milunovich downgraded Apple over concerns about its lack of competitiveness in growth markets, such as China, though he said he was "impressed by the specs of the 5S, the addition of NTT DoCoMo, and overnight news regarding China Mobile," referring to the iPhone's approval for use on China Mobile's exclusive network.
"We were surprised by the high price of the 5C ($549/649) at just $100 under the 5S without a contract, leaving little differentiation. Apple said that two phones replace the old 5, leaving the 4S as the low-end option," Milunovich's research note stated.
A spokeswoman for Bank of America declined to comment further and noted that the firm's research was proprietary. Credit Suisse and Piper Jaffray did not respond to requests for comment.
Credit Suisse, which reiterated its previous neutral rating, referred to the iPhone 5C as a premium device, even with a lower price point starting at $99.
"As usual, there were few surprises from AAPL's well-previewed iPhone launch yesterday," Credit Suisse's Chris Caso said, according to StreetInsider.com. "We think the biggest surprise from an investment perspective is that the new iPhone 5C will be positioned as a midrange phone, and won't provide much near-term help in addressing lower price points in emerging markets, as some had speculated."
David Rogers, executive director of BRITE at Columbia Business School and the faculty director of the school's Executive Education program on Digital Marketing Strategy, said emerging markets including China, Brazil and India are where the growth remains in the cutthroat smartphone market.
Rogers explained that most smartphone users in developing markets purchase devices without contracts at higher prices. The iPhone's out-of-contract price can cost twice as much as Chinese brands like Xiaomi, he said.
"From a branding point of view, Apple played it safe," Rogers said.
Rogers said the fingerprint sensor was a positive step in Apple's innovation, but the company could have expanded its use, such as linking to a smart household device. He said there are many barriers to expanding its use as a payment system.
"The finger reader is a cool factor, but all it does now is save you a few seconds," he said.
ABC News' Sandy Cannold contributed to this report.