TOPLINE
Apple shares tumbled Wednesday amid a broader market gain due to a report on lowered iPhone 14 production, shedding about $50 billion in market capitalization, but analysts say the dip is an unnecessary knee jerk reaction and retain a strong view on the current iPhone cycle.
KEY FACTS
Apple stock fell by as much as 4.4% to $145.03, a two-month low, in Wednesday morning trading after Bloomberg reported the company backed off plans to ramp up iPhone 14 production by as many as six million units in the second half of 2022 due to faltering demand.
However, Bloomberg reported Apple still expects to match its goal to produce 90 million iPhone 14 units in the second half of the year, in line with its reported estimate in July, and Morgan Stanley and Citi analysts each wrote in Wednesday notes their projections for iPhone demand remained unchanged.
Worries about iPhone 14 demand are “more bark than bite,” Morgan Stanley analysts wrote.
Demand for the pricier iPhone 14 Pro models outpaces demand for the base models, according to Bloomberg, and Wedbush analyst Dan Ives wrote “the iPhone 14 Pro demand is robust and this will enable Apple to power through near-term macro headwinds much better than feared by the Street.”
Apple shares recovered value in later trading, closing down only 1.3%, though Apple was the only company on the Dow Jones Industrial Average down for the day.
SURPRISING FACT
Apple shares fell more than those of any other large-cap companies in Wednesday trading. Despite Apple’s decline, the Dow Jones Industrial Average, tech-heavy Nasdaq Composite and S&P 500 each rose by more than 1% as the market looks to snap its week-long losing streak. Apple’s stock is down 19% year-to-date, outperforming the S&P 500’s 23% drop in the period.
KEY BACKGROUND
Apple unveiled the new iPhone models at a September 7 launch event, along with several other products. The company, which produces most of its iPhones in China, announced Monday it began to produce some iPhone 14 models in India as the company looks to diversify from political tension and supply chain snags originating in China. Apple will move 5% of iPhone production to India by year’s end and 25% of all iPhone production to the country by 2025, according to a report from JP Morgan analysts last week.
FURTHER READING
Apple Ditches iPhone Production Increase After Demand Falters (Bloomberg)
By Derek Saul, Forbes Staff