The stock had a negative start to the week and plunged about 4% as trading progressed Monday, dragging the Dow Jones index by more than 400 points. A similar slump was witnessed soon after the latest earnings report when the management’s prediction for iPhone shipments fell short of expectations.
After maintaining a bullish outlook for long, despite softening orders, the company reportedly slashed production of all the new iPhone models
While Apple is already facing stiff competition from comparatively smaller manufacturers, especially in China, too many new iPhone models are hitting the market these days. The general perception is that the prices of the latest versions of the feature-rich phone are too high. It needs to be noted that Apple changed its initial plan to roll out two new phones this year, and instead released three.
S&P 500 falls for the fifth day in a row as Apple, tech stocks tumble
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Apple’s suppliers including Cirrus Logic and Broadcom, who have been warning about the dip in the demand for top-end iPhones in recent weeks, also suffered a jolt when the market opened Monday. Underscoring the negative sentiment, the company recently asked its Asian partners to scale down production capacity. The recent decision to stop providing the break-up of sales numbers from the next quarter indicates that the management sees trouble going forward.
According to reports, production of iPhone XS, XS Max and XR have been trimmed by one-third after demand consistently stayed below the company’s outlook, with the cheaper XR witnessing the most pronounced weakness. Interestingly, earlier models like iPhone 8 and 8 Plus continue to attract customers.