On the first trading day of the new year, Apple's stock price fell 4%, hitting a seven-week low, and its market value evaporated by more than $100 billion. Just last month, Apple's closing market value stood above $3 trillion again, and the company's stock price has increased by about 50% in the past year. Apple's stock price plummeted because the brokerage Barclays lowered the company's stock rating and target pricing that day.
Barclays on Tuesday downgraded Apple's stock rating to "underweight" from "neutral" and lowered its price target for Apple to $160 over the next 12 months. Prior to this, few brokerages had given Apple stock a bearish rating.
Apple accounts for about 7% of the S&P 500 market weight. Apple currently trades at about 28.7 times trailing trailing earnings, well above the S&P 500's 19.8 times earnings.
Apple has been grappling with slowing demand since early last year and forecast holiday quarter sales to be below Wall Street expectations. There are also concerns about Apple's performance in China following the resurgence of Chinese rival Huawei's smartphones.
Zhu Jiatao, an analyst at research firm Canalys, previously told China Business News: "We expect that in China, Apple's iPhone may have price cuts, or there may be less control over channel promotions."
Barclays said weak iPhone 15 sales could be a warning sign for declining sales of Apple's next-generation iPhone 16 mobile phone and broader hardware sales.
Barclays analyst Tim Long wrote in a note to clients on Tuesday that the current "sluggish" iPhone 15 sales, particularly in China, portend similarly weak iPhone 16 sales.
Tim Long wrote: "iPhone sales and product mix remain weak, and Mac, iPad and wearable devices lack signs of rebound."
Last month, due to patent disputes, Apple temporarily suspended sales of its two high-end series of smartwatches, Apple Watch Series 9 and Apple Watch Ultra 2, in the United States. However, before Apple appeals and the court makes a final ruling, the two watches have temporarily resumed sales.
Apple Chief Financial Officer Luca Maestri already gave cautious predictions at the last quarter earnings conference. He said that during the holiday season, Apple's sales are expected to be basically the same as the previous quarter. That means investors shouldn't expect too much revenue growth from Apple during its busiest quarter of the year.
Mastri also said that the product division, which includes Mac and iPad, is facing difficulties compared with the same period last year. The division's revenue fell 5% in the last quarter, with Mac revenue falling nearly 34% year-over-year in the last quarter and iPad revenue falling 10%.
There is also news recently that Apple’s head-mounted display device Apple Vision Pro will be launched in the United States at the end of this month. Apple did not respond to CBN reporters for this news.
In this regard, Canalys expects that VisionPro will be out of stock for at least 12 months after release. Canalys analyst Liu Jiansen told China Business News: "Apple hopes to rely on VisionPro to break the mold of its key products (iPhone, iPad and Mac) to prove that it can continue to maintain its leading position in the field of innovation."
Barclays also predicted multiple risks that Apple will face in the future. In addition to sluggish hardware sales, other risks include the possibility that Apple's services business will face more stringent regulatory scrutiny.
Tim Long expects Apple's lucrative services business to also see slower growth, in part due to regulatory scrutiny. The current gross profit margin of Apple's services business is about twice the profit of all Apple's hardware products, accounting for nearly a quarter of the company's total revenue, and is also regarded as an important source of business driving Apple's profit growth. Apple CEO Cook emphasized in an earlier investor call that the growth of the services business unit was "better than expected."
Last month, gaming company Epic Games won an important victory in its lawsuit against Google. The court found that Google's Android App Store had an illegal monopoly, which was the opposite verdict from the case Epic Games sued Apple two years ago. Barclays Bank believes that the regulatory authorities will make a preliminary ruling on the Google Store in 2024, which may also affect the profit model of the Apple Mall in the future.
Google CEO Sundar Pichai previously confirmed that Google pays 36% of Safari search revenue to Apple.
On the other hand, after U.S. technology giants posted their largest gains in years throughout last year, driven by optimism about artificial intelligence, peaking inflation and expectations of further economic stimulus from central banks, the market expects this momentum to remain overall.
In the past year, the market value of Facebook parent company Meta surged 188% to US$909.3 billion, the largest annual increase in 11 years; the market value of US chip manufacturer Nvidia surged 240% to US$1.22 trillion, which was the company's largest annual increase since 2001.
Electric vehicle giant Tesla has also seen significant growth, with its market value doubling last year to $789 billion. The growth was driven by investments in its self-driving software and record vehicle deliveries in the final quarter of the year. The latest quarterly delivery data released by Tesla shows that throughout 2023, Tesla produced a total of approximately 1.85 million electric vehicles globally and delivered approximately 1.81 million vehicles.