Apple is falling hard, and a turnaround isn’t currently in sight. Since reporting its earnings on November 1, Apple’s share price has experienced a downward spiral. The stock is currently trading well below its all-time-high of $233.47 reached in early October at just $186.
Following decreased guidance, Apple stock dropped around 7 percent on November 1. The stock then experienced some slight recovery before further headwinds set in. Worries over iPhone sales are the current issue at hand for the company. The company recently announced a decrease in reporting individual figures for device sales. iPhones account for around 60 percent of Apple’s current revenue. In a maturing market, their most recent play was to increase average cost as a means of offsetting the huge levels of market saturation.
Currently, the company is seeing negative news in the form of downgrades and decreased outlooks from its suppliers. The share price is feeling the full impact.
On Wednesday, Apple experienced a downgrade from Guggenheim Partners and a price-target cut UBS, who both cited an anticipated decline in sales over Q4 and 2019.
“Unlike last year [we] do not see ASP (average selling price) increases providing enough offset, with our forecast that blended iPhone ASPs increase only +3%Y/Y, leaving iPhone revenues -2%Y/Y,” wrote Guggenheim analyst Robert Cihra in a note explaining his downgrading of the stock from Buy to Neutral. “Moreover, we see growing risk of even softer iPhone unit demand, with downside in China, India and other emerging markets, where Apple may need to start considering lower price points.”
UBS analyst Tim Arcuri cut his price target for the stock from $240 to $225, citing mostly reports of reduced shipments from Apple suppliers like Lumentum and AMS. Following news Monday from Lumentum, Apple’s share price fell by around 5 percent. While none of the four suppliers have directly cited a decrease in Apple orders, the writing is on the wall as far as Wall Street is concerned.
Arcuri also reduced his sales estimates for Apples 4th Quarter from 75 million iPhones to 73.5 million.
“We note these cuts are significantly less than the LITE news would imply,” wrote Arcuri in a note. “Ultimately, we believe AAPL continues to face FX headwinds given ongoing [U.S. dollar] appreciation against key global currencies. In China, given [the dollar-yuan trade], the supply chain suggests many consumers are opting for high-end models w/similar specs from local competitors rather than the XR.”
With AMS announcing its reduced sales figures after market close on Wednesday, the tides wont be turning for Apple this week.
According to the company, which manufactures light sensors for smart phones, “recent demand changes from a major consumer customer,” are the key reason behind its disappointing figures, leading analysts to lump them in with other suppliers.
Moving forward, its highly unlikely for the stock to see much more of a downside than it already has. However, the hopefulness of a successful product line launch before the holiday season, and the likelihood of services revamping Apple’s growth story are looking a bit diminished.