Apple’s Shares Dropped: Factors

According to S&P Global Market Intelligence, last month was harmful to Apple $AAPL, shares of which recently fell by 11,7%.  The iPhone maker reported a solid quarter in September, with revenue up 20% year over year and earnings per share up 41% year over year. However, Apple issued lower-than-expected guidance for the fiscal first quarter (which ended in December), sending shares tumbling. That negative sentiment carried over to the month of December.

It is also possible that the trade war between China and the US had an influence on iPhone sales. In addition, in early December, a Chinese court made a decision that Apple’s old models of iPhone should be sold off. Some analysts cut their price targets on Apple during the last weeks and it also might affect the stock price. China has an influence on almost 20% of Apple’s revenue, according to the 2018 fiscal year results.  

On January 2nd, Tim Cook, CEO of Apple $AAPL, revealed a document, that shows that predictable revenue for the Q1 2019 might be $84B, which is less than previous estimates between $89B and $93B. Cook explained it with overall market slowdown, especially on the Chinese market, in addition to supply constraints, in ramping new products for the revenue shortfall.n addition to supplying constraints, in ramping new products for the revenue shortfall. This announcement also made the situation a bit worse. These updated just added some oil into the fire and pushed shares down for another 6% since the end of December.

On the other hand, the sharp decline in the stock price made it more available for buying. Apple is still one of the most reach and valuable brands in the world, which could make the stock a good shot for buying right now. Cook noted that “there are more Apple devices being used than ever before, and it’s a testament to the ongoing loyalty, satisfaction, and engagement of our customers.” even though consumers didn’t change their old iPhones to the new ones as fast as it had been expected. Apple’s non-iPhone services, such as wearables, and Mac, had a strong quarter ending in December, with revenue increased on 19% year over year period. And also we shouldn’t forget about the news service which is on a pipeline and might also change a situation. Cook provided encouraging words for investors, saying “We manage Apple for the long term, and Apple has always used periods of adversity to reexamine our approach, to take advantage of our culture of flexibility, adaptability, and creativity, and to emerge better as a result… Apple innovates like no other company on earth, and we are not taking our foot off the gas.”

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