Apple shares continue to plunge
Concerns over Chinese sales latest woe to hit tech giant.
Apple’s share-price implosion continued Tuesday over worries about iPhone sales in China, helping drive down broader stock markets.
The tech giant’s stock closed 3.8 per cent lower at $114.64 (U.S.) on trading volume of 123 million shares, about three times normal. That continued a fall that gained pace in July when Apple said it sold fewer iPhones than expected in the third quarter amid elevated expectations.
That raised doubts about whether the anticipated iPhone 6s series can generate year-over-year growth on the scale of the company’s previous offerings.
Apple stock has now fallen 14 per cent from its $133.60 peak in February and is on track to post losses in the past five sessions and 10 of the previous 11.
On Monday, Apple breached a technical barrier seen as a marker between short- and longer-term trends. The shares are now in correction territory, viewed as a decline of at least 10 per cent from a significant high. It’s not clear, though, if the current price reflects a change in market sentiment, company fundamentals — or both.
“It is a popular stock and it had to lose speed, but for the broader market it makes one wonder if we are staring down a price correction,” Peter Sorrentino, a Cincinnati-based fund manager, told Bloomberg.
Since entering the Dow Jones Average in March, Apple has been a drag on the index, accounting for about 14 per cent of its losses since then. Apple is also the most heavily weighted component of the Nasdaq Composite, which closed about a quarter of a per cent lower Tuesday.
The Cupertino, Calif.-based tech giant’s stock has a history of upward moves after product launches, followed by sharp retrenchments. Some analysts see the current tumble as a buying opportunity.
In a note to investors, RBC Capital Markets reiterated its $150 price target for Apple shares, suggesting that manufacturing and component purchase commitments as of June create a “material ramp” for new products.
“We believe AAPL’s current stock price creates an attractive entry point for investors to benefit from AAPL’s ability to sustain revenue and (earnings per share) growth through (fiscal year 2015),” RBC’s Amit Daryanani wrote in the note provided to blog site Apple Insider.
Analysts said investors are reacting this week to losses in Chinese stocks in June and July that could leave consumers with less cash to buy Apple gear, as well as a report showing Xiaomi regaining top spot as the largest smartphone vendor in that market, with the iPhone falling to third place.
Greater China, Apple’s second-largest market in net sales after a run-up in iPhone 6 sales, is remaining stagnant quarter to quarter, the Canalys report said.
“Competition among major brands has never been so intense,” said researcher Jingwen Wang, noting that Apple is looking increasingly to China as North American and European markets mature.
Investors may also be concerned about Apple’s debt, which has grown to 20 per cent of assets (though that’s still a fraction of its disposable cash), contracting iPad sales, mixed reviews for the Apple Watch and some user complaints about the just-launched Apple Music service.
By: Michael Lewis
Read more at: http://www.thestar.com/business/2015/08/04/apple-shares-continue-to-plunge.html