Apple Shares Decline – Apple’s prediction for a quiet holiday quarter helped the company’s shares trim losses on Friday, as the US jobs report raised expectations that the Federal Reserve would cease raising interest rates.
Apple Shares Decline
The stock had dropped more than 3 percent prior to the bell, and it was down 1.5% in early trading. If the losses continue, the most valuable company in the world is expected to lose $40 billion, or around in market value.
On Thursday, the manufacturer of iPhones predicted lower-than-expected sales for the holiday quarter, which is typically its highest, citing a lackluster market for iPads and wearable technology.
Fears about broader holiday demand were stoked by the prognosis, which included predictions from Deloitte and the US National Retail Federation that sticky inflation would cause sales to climb at the slowest rate in years during the critical shopping season.
The holiday quarter typically sets the tone for Apple’s fiscal year, which runs through September. “Apple’s revenue growth has stalled over the past few quarters — and appears likely to continue to stagnate over the next year,” brokerage Bernstein stated.
However, data showing nonfarm payrolls increased less than anticipated in October gave the stock some support and lifted shares generally on optimism that the Fed could end its rate-tightening cycle.
LSEG data shows that at least 14 analysts lowered their price predictions for Apple, bringing the consensus price target down to $195. Apple is currently one of the least expensive of the so-called “Magnificent Seven” stocks, trading at over 26 times its 12-month forward profit expectations.
Tom Forte, an analyst at DA Davidson, stated, “We view management’s flat sales guidance as proof the company cannot rely on iPhone sales to drive shares higher, as it has in the past.”
Sales of Apple’s primary source of income, the iPhone, increased in the September quarter and are expected to continue rising in the final three months of 2023.
Additionally, in an effort to calm Wall Street’s concerns that Apple was losing market share to a resurgent Huawei and other regional smartphone vendors, CEO Tim Cook emphasized that the iPhone 15 models were performing well in China. “In mainland China, we set a quarterly record for the September quarter for iPhone,” Cook stated to Reuters.
A number of analysts applauded the comments. The Street will be relieved on this front, according to Dan Ives, an analyst at Wedbush Securities.