Apple shares yesterday closed below $100 for the first time in 15 months, the WSJ noting that the value of the company has dropped by $100B in a little over a month, losing 7% this week alone.
The Cupertino company’s 4.2% drop on the day was greater than the overall market’s slide and the 3% slump in the Nasdaq Composite, which closed down 10% from its May peak. Since early December, Apple has shed $100 billion in market value.
The slide is being attributed to two factors: one (semi-)factual, one speculative …
On the factual side, the Chinese economy has been slowing for some time, with particular concern this week when regulators suspended trading in Chinese shares not just once but twice. The People’s Bank of China had also reduced the value of the Yuan eight days running.
The immediate crisis in China appears to have eased today, markets closing 2% up and the currency rate also rising, but longer-term fears remain.
I describe this as a semi-factual issue in Apple’s case, as nobody knows what impact – if any – this is having on Apple’s sales in the country. It’s perfectly possible for a premium brand to continue to sell well in an overall sluggish economy.
On the speculative side, there have been widespread suggestions from analysts and media alike that Apple is scaling back iPhone orders in the light of reduced demand, many analysts forecasting that Apple may see its first ever drop in iPhone sales in the current quarter.
As we noted earlier this week, Apple’s complex supply chain makes it notoriously difficult to use supplier reports to assess overall iPhone production levels. One analyst recently suggested that even if production has slowed, existing inventory means that won’t necessarily be reflected in reduced sales.
While some investors may be selling, Business Insider notes that none of the analysts tracked by Thomson Reuters advocate doing so, all of them rating AAPL as a hold or a buy. The report does, though, contain the caveat that some have not updated their ratings in the past month, so may do so later.
We won’t know this quarter’s iPhone sales numbers until sometime in April, when Apple reports its earnings for fiscal Q2 (calendar Q1). However, we’ll get a big clue from the forward revenue guidance the company offers on January 26, when Apple reports its holiday quarter earnings.