The stock prices of tech behemoth Apple have suffered a significant setback, plummeting by 10.8% to $175.07 within this month alone. This decline overshadows the comparatively modest 4.8% drop experienced by the S&P 500 and the 3% dip in the Dow Jones Industrial Average, according to data provided by Yahoo Finance. This downturn has led Apple’s stock to officially enter a state of technical correction, marking an approximate 11% decrease from its peak on July 31, where it stood at $196.45. A technical correction, a term coined in financial markets, indicates a decline of at least 10% in a stock’s price or market value from its highest point.
Market analysts attribute the downturn in stock prices of Apple to a confluence of factors. Foremost among these is the escalating economic pressure in China that unfolded over the course of August. Concerns surrounding the stability of over-leveraged property developers, the deliberate approach taken by the Chinese government in addressing the ongoing crisis, and the sluggishness of the stock market have collectively cast a shadow on the future demand for Apple products.
The significance of the Chinese market for Apple cannot be underestimated. During the most recent quarter, Apple reported an 8% rise in sales in Greater China, generating $15.76 billion in revenue. Notably, sales of iPhones in the region witnessed a double-digit increase as consumers upgraded their smartphones. With Greater China contributing a projected $67.2 billion in sales for Apple during the fiscal year that concluded on September 24, 2023, the region accounts for a substantial 18% of the company’s total sales. Analysts on Wall Street presently anticipate a nearly 16% sales growth in Greater China for Apple’s upcoming fiscal year, driven primarily by robust demand for the highly anticipated iPhone 15.
However, Apple’s CEO, Tim Cook, appeared to temper optimism about the Chinese market as the company released its financial results earlier in the month. Apple’s guidance for the upcoming September quarter exhibited a cautious outlook, projecting a modest year-over-year revenue decline. This forecast diverged from the Street’s expectations of slight growth for the quarter. During an earnings call, Cook attributed this projection to the persistently uneven macroeconomic landscape.
In light of the possibility of a disappointing sales performance in China, investors have taken a proactive stance, choosing to divest from Apple shares in the near term. This market sentiment has been further dampened by the impending introduction of the iPhone 15, which is expected to occur in mid-September. Unlike Apple’s previous groundbreaking innovations, industry experts predict that the iPhone 15 will showcase only incremental improvements, such as the replacement of the iPhone’s distinctive notch. Notably, the company’s latest offering is not expected to introduce any transformative features akin to Samsung’s foldable phones.
Amit Daryanani, an analyst at Evercore ISI, summarized this sentiment by stating, “We think the iPhone 15 will be more of an evolutionary product vs. a revolutionary one.”
Despite these apprehensions and the subsequent decline in Apple’s stock price, the sell-side community remains resolute in its support for the tech giant. Notably, there has been only one notable downgrade from investment banks, with Barton Crockett, an analyst at Rosenblatt Securities, downgrading Apple’s rating from Buy to Neutral.
As Apple navigates this challenging landscape, the global financial community closely watches its performance in the wake of economic uncertainties in China and the unveiling of the iPhone 15.
Source: Yahoo Finance
