The company (AAPL) announced on Wednesday that investors should expect lower revenues than those projected for the last quarter because sales in China were below those anticipated. Following this news, Apple stock dropped $11.97 per share, or roughly 7.5%, during aftermarket trading hours on January 2, 2019.
Apple Inc.'s $1,000 iPhone is a tough sell to consumers in China unnerved by an economic slump and the trade war with the U.S. "Don't forget, Apple makes the product in China". One of Apple's key manufacturing partners, Taiwan's Foxconn, plans to start making iPhone X models at its plant in the southern Indian state of Tamil Nadu in 2019, according to multiple media reports.
Wall Street analysts scrambled to cut their price targets on Apple, with at least 27 lowering their estimates.
"This is not a catastrophe nor is it a sign that Apple is losing its grip on the smartphone market but merely a misjudgment by Apple with regard to how much money people will pay for an iPhone".
"I am not concerned for the company, but it's likely investors will not see the company value it was at until it can see a likely path to double-digit revenue growth", Moorhead said.
Factors impacting iPhone sales include "consumers adapting to a world with fewer carrier subsidies, U.S. dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements", Cook wrote.
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An advertisement for Huawei Mate 20 series is seen outside an Apple store, as customers queue before the store opens on the day the new iPhone XR goes on sale in Shanghai, China October 26, 2018.
Apple and the White House didn't immediately respond to requests for comment.
Apple shares traded as low as 142.81 dollars apiece, or almost 10 percent lower on Thursday, registering a 52-week low. While the analysts acknowledged that slower iPhone sales "ultimately presents services headwinds", meaning there's a chance the services business could potentially take a hit along with the iPhone business, there's still a "has huge untapped services rev pool".
"I think there are a heck of a lot of US companies that have a lot of sales in China that are basically going to be watching their earnings be downgraded next year".
"I think the trade war had a lot to do with this", Zino said. -China trade tensions drove the S&P 500 Index to the brink of a bear market.
Now, this statement about battery replacements having an impact on iPhone sales raises a number of questions.
Robert Pavlik, chief investment strategist at SlateStone Wealth in NY said Apple's update "reiterates worries that China and trade issues have not been resolved".
And Apple has "failed to acknowledge the possibility that current iPhone prices are simply too high", he wrote.