On Thursday, the company known for producing iPhones projected sales for the holiday season, its typically most lucrative period, attributing the lackluster demand for iPads and wearables as the cause.
Apple shares, which had initially dropped due to its forecast of a lackluster holiday quarter, rebounded on Friday following a US jobs report that raised expectations of a pause in Federal Reserve interest rate hikes.
In early trading, the stock was down 1.5 percent, having fallen over 3 percent earlier. The world’s most valuable company was at risk of losing $40 billion in market value if the losses persisted.
On Thursday, the iPhone maker predicted holiday quarter sales, typically its most significant period, would fall short of Wall Street estimates, citing weak demand for iPads and wearables. This projection raised concerns about holiday demand in general, with various estimates, including those from the US National Retail Federation and Deloitte, indicating a slower rise in sales during the crucial shopping season due to persistent inflation.
Bernstein, a brokerage firm, commented on Apple’s revenue growth, which had stalled in recent quarters and appeared likely to continue to stagnate over the next year. They noted that the holiday quarter usually sets the tone for Apple’s fiscal year running until September.
However, the stock received some support when data revealed that nonfarm payrolls increased less than expected in October, boosting shares across the board due to expectations that the Fed might halt its cycle of raising interest rates.
At least 14 analysts lowered their price targets for Apple, reducing the median price target to $195, as per LSEG data. Apple currently trades at nearly 26 times its 12-month forward earnings estimates, one of the lowest among the so-called “Magnificent Seven” stocks.
DA Davidson analyst Tom Forte commented on Apple’s flat sales guidance, suggesting that the company could no longer rely on iPhone sales to boost its stock price, as it has done in the past.
The iPhone, Apple’s primary revenue source, witnessed an increase in sales during the September quarter and is also expected to show growth in the final quarter of 2023.
CEO Tim Cook reassured investors that the iPhone 15 models were performing well in China, addressing concerns that Apple was losing market share to resurgent local competitors like Huawei. Cook stated, “In mainland China, we set a quarterly record for the September quarter for iPhone.”
Several analysts reacted positively to Cook’s remarks, with Wedbush Securities analyst Dan Ives expressing relief on Wall Street’s behalf.