Apple shares drop as tech titan loses $1 trillion valuation
Apple shares dived over five per cent as US markets opened today, causing the Californian company to fall below its $1 trillion valuation as investors reacted to its prediction of a Christmas slump.
The tech giant yesterday warned shareholders that festive sales could fall below expectations, even as it recorded double-digit growth for the fifth consecutive quarter.
The iPhone maker’s revenue outlook for the rest of 2018 stood between $89bn (£68.4bn) and $93bn, against expected revenue of $92.8bn as assessed by S&P Global Market Intelligence.
Meanwhile chief executive Tim Cook revealed the tech titan will stop reporting unit sales for its iPhones, iPads and other products.
CMC Markets chief analyst Michael Hewson said the decision suggests the company feels the market may have hit “peak iPhone”, and be unlikely to achieve previous unit numbers.
“Judging by the sales numbers that does seem likely but when your average selling price rises to $793 a unit, due to the launch of higher spec and thus higher priced products, who really cares?” Hewson said.
Shares hit $209.20, down from $232 at the start of October, even after Cook reassured investors that Apple’s popularity in China remained strong, in the face of a strong US and China trade war.
Cook blamed Apple’s weaker Christmas forecast on foreign exchange rates, lessening demand in emerging markets and a fear that Apple would not be able to produce enough of its new products to sufficiently meet demand.
Hewson, however, pointed to a “rather twisted sense of priorities” as analysts expect the company to bring in revenue of $90bn next quarter but also obsess about unit numbers over product prices.
“Apple management are probably more concerned that a higher unit sale price might prompt accusations that the company is taken its customers for granted by continually ramping up prices,” he said.