(Bloomberg) — A steady decline in Apple Inc. stock pushed the iPhone maker’s market value below $2 trillion, the latest casualty in the tech stock market.
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Apple fell 3.7% on Tuesday, closing at its lowest level since June 2021, as concerns mount over iPhone supply in the crucial Christmas quarter and investors lose confidence in a respite from higher interest rates. The slump took Apple’s market value to $1.99 trillion and ended its reign as the last company valued at $2 trillion after Microsoft Corp. and oil giant Saudi Aramco withdrew in 2022.
The milestone marks a fall from grace for Apple. The stock spent much of last year outperforming the S&P 500 index, but has stumbled in recent weeks amid fears that iPhone production issues in China could ruin holiday sales, the company’s most important period.
Exactly one year ago, Apple’s shares briefly rebounded to climb over $3 trillion in market value as the S&P 500 hit a record high.
The four largest US tech and internet companies lost more than $3 trillion in market value in 2022 amid rising inflation and slowing revenue growth, which accelerated during the Covid-19 pandemic. December was Apple’s worst month since May 2019, falling 12%, steeper than the 9% decline in the tech-heavy Nasdaq 100 index over the same period.
IPhone production problems
Cupertino, California-based Apple has suffered supply disruptions due to Covid-19 lockdowns in China, but these have eased. Manufacturing partner Foxconn Technology Group has brought the world’s largest iPhone factory back to around 90% of expected peak capacity.
Known as iPhone City, the Zhengzhou plant produces the vast majority of the high-end iPhone 14 Pro and Pro Max devices. In November, thousands of workers fled or staged protests against extreme Covid rules. But Foxconn ended most of those restrictions last month and offered more incentives for new and current employees.
The story goes on
Another Apple supplier, Murata Manufacturing Co., added a bearish note last month. The company expects the tech giant to further scale back production plans for the iPhone 14 in the coming months. The iPhone accounts for about half of Apple’s sales.
“Judging by the availability of cellphones in stores, I see a downward revision,” Murata President Norio Nakajima said in an interview. “I hope it doesn’t get too deep.”
Meanwhile, Nikkei reported Monday that Apple has told several suppliers to cut back on components for some products, including AirPods, the Apple Watch and MacBooks, amid slowing demand.
Apple is expected to report its latest earnings report in the coming weeks. The quarter, which runs through December, is the busiest period of the year in terms of revenue, and analysts had initially forecast record-breaking earnings. Now they are forecasting a slight drop to $122.9 billion, according to Bloomberg estimates.
Apple’s valuation is underpinned by hopes that the company still has major growth opportunities ahead of it. Services have been a key growth area in recent years and now account for more than a fifth of sales. The company is also working on some big changes, like a mixed reality headset that could be unveiled later this year and an electric vehicle.
–Assisted by Ryan Vlastelica and Nick Turner.
(Updates as of market close.)
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