Published - January 4, 2023 @ 12:42 PM (EET)
For the first time since March 2021, Apple's market value slid below $2 trillion after the company's shares closed down 3.7% in Tuesday's trading session over investor concerns that the Tim Cook-led company will continue to struggle with iPhone 14 Pro shipments during the holiday season.
The sell-off comes exactly a year ago after Apple's (NASDAQ:AAPL) shares briefly rallied to climb above $3 trillion in market value. The drop puts the iPhone maker's market capitalization at $1.99 trillion, ending its reign as the last company to boast a $2 trillion valuation after Microsoft Corp. (NASDAQ:MSFT) and oil giant Saudi Aramco retreated in 2022.
WHAT HAPPENED
Investors are increasingly worried that Covid restrictions on its main factory in China, rising interest rates, and declining consumer confidence could hurt demand for Apple's premium-priced products.
According to a recent report from supply chain analyst Trendforce, Apple's iPhone shipments declined 22% in the December quarter.
In addition, analyst Jerome Ramel at investment bank BNP Paribas, on Tuesday morning, downgraded Apple stock from Outperform to Neutral and slashed its price target by 22%, from $180 to $140 a share.
BNP noted that Apple would likely ship no more than 224 million iPhones in 2023, down 7% from 2021. Meanwhile, Mac and iPad shipments are also expected to decline this year, with earnings falling by as much as 6%.
NOW WHAT
In the coming weeks, Apple is expected to deliver its latest quarterly earnings report that runs through December, its most significant sales period of the year.
While analysts previously projected record-setting revenue, they are now predicting slight declines of about 1%, which would mark Apple's first quarterly revenue drop since the March quarter of 2019.
Bokeh Capital Partners' analyst Kim Forrest said,
"They (Apple) tend to skew to the high-end consumer device customer, but even that demographic might be affected by the high price of everything."
But, even after a 27% drop in 2022, Apple has provided stellar results to long-term shareholders.
Compared to a 180% gain in the S&P 500 since 2007, when co-founder Steve Jobs launched the iPhone, investors who bought and held Apple over the same period have enjoyed profits of over 4,000%, excluding dividends.
