5 Reasons - Why Apple Stock Is Down?

  • Jan 08, 2019 AEDT
  • Team Kalkine
5 Reasons - Why Apple Stock Is Down?

Downgraded Revenue Guidance: Amid the escalating trade tensions between the United States and China, the World’s first trillion-dollar company gets knocked down. On Wednesday, iPhone maker Apple Inc. downgraded its expectation for the first quarter of Fiscal 2019 claiming China to be the major reason for the revenue decline.

In the letter to investors, Apple’s Chief Executive Officer Tim Cook stated that the company now anticipates its revenue guidance to approximately $84 billion for three months ended 29 December 2018. It reflects a notable reduction from the previously estimated range of $89 billion to $93 billion, first released in November 2018.

The shocking revelation of lower revenue guidance charged the bear market as the stock (NASDAQ: AAPL) fell straight 9.96% to US$142.19 on 3 January 2019. In the past 5-day trade to 4 January 2019, Apple’s stock price has nosedived almost 5% with market capitalization down by ~$38 billion.

A slowdown in China’s Economy: Apple’s major chunk of iPhone revenue is drawn from Chinese marketplace. But the company got hit by lower than expected iPhone revenue when China reported the second lowest growth in GDP during September quarter over the last 25 years. Also, the market statistics have shown a sharp downturn in China’s smartphone market.

However, Mr. Tim Cook continued to give bright hopes to investors and believes that China will make a substantial contribution to the company’s revenue going forward.

Investors not convinced with the service segment’s growth: In the recent financial results, Apple has declared substantial top-line growth in its service segment, but it seems investors still not have the confidence in Apple’s service revenue.

iPhone’s sale has constantly been hitting the stock because of which the improvement in Service segment’s revenue is getting overlooked by many investors.

Emerging market challenge: Technology giant has officially accepted the deceleration that it has faced in its traffic to retail stores and channel partners in China due to the uncertainties hovering around the global financial market. The company stated that it had estimated some challenges to be coming across in the primary emerging markets, but it did not anticipate the magnitude of the economic meltdown.

Sales Ban in Germany: In the ongoing legal battle with Qualcomm, Apple has been asked to pull its iPhone 7 and iPhone 8 from sale in Germany. The sales ban follows the patent licensing and infringement issues with American telecommunication equipment company Qualcomm.

This countrywide ban has wiped out Apple’s iPhone 7 and iPhone 8 from 15 retail stores in Germany. However, its current generation models including iPhone XS, iPhone XS Max, and iPhone XR are available for purchase to German customers.

On this news, the investors immediately turned their tables to bullish market trend and pressed the ‘sell’ button for Apple Inc’s stock. AAPL last traded at US$147.93 on 7 January 2019.


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