Apple stock fell 3% after reporting falling iPhone demand — but analysts say the drop is unwarranted

Posted on September 28, 2022

Apple stock fell 3% after reporting falling iPhone demand — but analysts say the drop is unwarranted

top line

Apple shares fell on Wednesday amid broader market gains due to a report of reduced iPhone 14 production, shedding about $50 billion in market value, but analysts say the downturn is an unnecessary unnecessary reflex and maintains a strong view of the current iPhone cycle. .

The new iPhone 14 and 14 Plus were shown at Apple’s launch event earlier this month.

AFP via Getty Images

key facts

Apple’s stock fell 2.8% to $147.56, its lowest in two months, in early morning trading after Bloomberg reported that the company backtracked on plans to increase iPhone 14 production by up to six million units in the second half of 2022 due to faltering demand.

However, Bloomberg reports that Apple still expects to meet its goal of producing 90 million iPhone 14 units in the second half of the year, in line with its estimates reported in July, and Morgan Stanley and Citi analysts wrote their iPhone 14 notes on Wednesday. The demand remained unchanged.

Morgan Stanley analysts wrote that concerns about demand for the iPhone 14 “more bark than bite.”

Demand for more expensive iPhone 14 Pro models is outstripping demand for base models, according to Bloomberg, and Wedbush analyst Dan Ives wrote: “Demand for the iPhone 14 Pro is strong and this will enable Apple to operate through headwinds in the near term much better than feared. street”.

Amazing fact

Apple shares fell more than those of any other large company in Wednesday's trading. Despite Apple's slide, the Dow Jones Industrial Average, the tech-heavy Composite Nasdaq, and the Standard & Poor's 500 all rose more than 1% as the market eyed its week-long streak of losses. Apple stock is down 19% year-to-date, outperforming the S&P 500's 23% decline in the period.

main background

Apple unveiled the new iPhone models at its September 7 launch event, along with several other products. The company, which produces most of its iPhones in China, announced on Monday that it has begun production of some iPhone 14 models in India as the company looks to diversify from political tension and supply chain hurdles that arise in China. Apple will move 5% of iPhone production to India by the end of the year and 25% of total iPhone production to the country by 2025, according to a report from JP Morgan analysts last week.