Apple Stock
Apple stock is down again today after the company reported unexpectedly weak sales numbers on Thursday afternoon. Apple stock was expected to go up today after a successful product launch yesterday, but many analysts are pointing towards the company’s newest phone as being less revolutionary than it first appeared and say that we’re finally seeing the results of slowing iPhone sales growth. It’s predicted that Apple stock will continue to drop in the next few days, with some even going so far as to say that this might be the beginning of Apple’s inevitable decline from its peak earlier this year.
Apple shares down 20%
Apple stock fell more than 20% on Thursday following a surprise quarterly revenue warning. The company said it sold $50 billion in iPhones and other products during its last quarter but warned that it expects sales to fall as much as $9 billion short of expectations for its next period, even if analysts don’t revise their outlooks downward. Apple also said that consumer demand is softer than anticipated, with sales of its premium iPhone X model flatlining—particularly in China.
What happened?
Earlier today, Apple stock dropped more than 4 percent on no news. A $50 billion loss was reported for its second fiscal quarter, and it looks like that might be part of why Apple stock declined so drastically. You can see in a chart from Google Finance that Apple’s decline is in line with other companies like Tesla and Netflix (NFLX). That’s because investors are nervous—they believe Apple will be facing a challenging period as its revenue growth slows. Analysts say they still expect revenue to grow 11 percent year over year, which would mean more than $258 billion in sales by 2020.
The future is uncertain
Some investors say a full-blown trade war would be terrible for Apple and its stock. Chinese consumers represent one of Apple’s biggest markets, accounting for approximately one in every four iPhones sold. Any economic downturn caused by tariffs could hurt iPhone sales there, as well as in other emerging markets like India. Should that happen, Apple may have to raise prices in order to recoup some of those losses — putting pressure on sales here at home as well. In general, uncertainty has been known to cause spikes in volatility: Markets are especially wary right now because of an upcoming vote on whether Britain will remain part of the European Union, while talk over trade wars between China and the U.S., along with heightened tensions between Russia and Ukraine have also had investors on edge lately.
Why this could be good news
The technology and consumer discretionary sectors have suffered as of late, but Amazon may be on its way to doing a lot of damage to companies in those sectors. Apple stock is down more than 11% today and ranks among the biggest tech drags on Friday's trading session. Perhaps investors are taking profits in Apple or perhaps they're preparing for a slowdown in iPhone sales, which has historically been responsible for much of Apple's overall earnings growth. The Dow Jones Industrial Average and S&P 500 fell 2.3% and 1.6%, respectively, on Friday while Nasdaq Composite dropped 2.7%. At its current pace, Amazon stock is up more than 35% year-to-date, making it one of 2018's best performing S&P 500 components thus far.