Apple stock is on pace to have its worst month since 2008, dropping 21% and wiping out over $200 billion in value.
In fact, it briefly lost its crown as the most valuable U.S. company to Microsoft this week.
Here’s why investors have been so negative on Apple lately.
Apple stock is having a terrible month.
Although it’s still up just under 3% on the year, it’s been deeply slumping since November 1, dropping 21% during this month, wiping out over $200 billion in value. That was when Apple said that it would not longer reveal how many iPhones it sells in a given quarter, leading analysts to speculate that unit sales were going to start trending downwards.
That’s been a big contributor to the rout. In fact, for a short period of time during trading on Monday and Tuesday, Apple briefly lost its crown as the most valuable U.S. company — to Microsoft!
Ultimately, it’s all shaping up to be Apple’s worst month since 2008, during the financial crisis.
There are a lot of reasons why Apple’s in a slump. Let’s break them down:
SEE ALSO: The last time Microsoft was more valuable than Apple, the Zune was still taking on the iPod
1. The global smartphone market is slumping and shrinking, with only a slight glimmer of hope in the future. Apple, which makes 61% of its revenue selling iPhones, is not exempt.
“According to preliminary data from the International Data Corporation Worldwide Quarterly Mobile Phone Tracker, smartphone vendors shipped a total of 355.2 million units during the third quarter of 2018, resulting in a year-over-year decline of 6.0%. This was the fourth consecutive quarter of year-over-year declines for the global smartphone market, which raises questions about the market’s future. IDC maintains its view that the market will return to growth in 2019, but at this stage it is too early to tell what that growth will look like.” — International Data Corporation
2. But there are a lot of signs pointing to slower demand for Apple’s iPhones specifically, especially its mid-range iPhone XR, which costs $750. Several Apple suppliers which make parts for that device have slashed their forecasts in recent weeks.
“October sales for AAPL’s Taiwanese suppliers were better than seasonal given the delayed iPhone XR release. We expect a sharp reversal in this dynamic, with spot checks late last week highlighting 20-30% iPhone order …read more
Source:: Business Insider