Apple is navigating a turbulent week as it prepares for the much-anticipated release of the iPhone 15. The company’s stock prices have experienced a recent decline, extending losses from the previous trading day.
One prominent concern for investors centers around the potential impact on Apple‘s sales in China, driven by reports of a ban on government officials using iPhones for official purposes. This development is being juxtaposed with the optimism surrounding the imminent launch of the iPhone 15, scheduled for the upcoming Tuesday.
Apple’s shares have dipped by 2.9%, settling at $177.56, marking the second consecutive day of declines. While the stock has exhibited a robust 36.9% increase in value this year up to Thursday, it remains approximately 10% below its peak value of $196.45, reached on July 31.
Since Tuesday, Apple’s market capitalization has seen a substantial reduction of $189.8 billion, bringing it to approximately $2.8 trillion.
The central question revolves around the trajectory of Apple’s stock in the short term, with both technical analysis and fundamental business indicators pointing to potential downward movement.
John Roque, the senior managing director at 22V Research, presents the notion that Apple’s stock could potentially retreat to $150. This assessment is based on an evaluation of the company’s stock chart and historical patterns of corrections following periods of growth. Roque clarifies that he does not anticipate a replication of the 35% correction observed in previous instances, which would push Apple’s stock below $130. However, he acknowledges that the stock’s weekly upward momentum reached its zenith at the close of July and has since waned, hinting at a milder correction.
For those investors who prefer a fundamental analysis approach, an examination of the potential threat to Apple in China becomes paramount. A reported ban on iPhones exclusively for employees of Chinese government agencies, as highlighted by The Wall Street Journal, could potentially affect fewer than 500,000 units, as suggested by Daniel Ives of Wedbush. Ives anticipates the sale of approximately 45 million iPhones in China over the coming year, citing Apple’s substantial market share gains, partly attributed to the impending iPhone 15.
Ives has set a 12-month target price of $230 for Apple shares and has assigned them an “Outperform” rating.
The landscape could evolve if Bloomberg’s report concerning China expanding the ban from central government officials to employees of state-owned enterprises proves accurate. Such an expansion could potentially impact millions more individuals, although the extent and enforcement of these restrictions by Chinese authorities remain uncertain.
Analysts from Evercore ISI contend that the consequences of these developments remain ambiguous. They perceive it as more of a headline issue than something that would significantly affect Apple’s financial performance. Consequently, they maintain their “Outperform” rating and a $210 price target.
Evercore ISI analysts emphasize that since China constitutes approximately 19% of Apple’s revenue and supports over five million jobs in the country as of 2019, taking substantial actions against Apple would pose challenges for the Chinese Communist Party without adverse repercussions on Chinese employment.
Neo Wang, Evercore’s China strategist, speculates that even if the iPhone ban were extended to strategically important companies with hundreds of thousands of employees, it would likely be limited to high-ranking leaders responsible for strategic planning and decision-making.
Furthermore, Wang suggests that Apple could potentially provoke Beijing by relocating its supply chains from China at a pace or to an extent that discomfits Chinese officials. In such a scenario, Beijing might resort to leveraging “security” concerns excessively as a means of penalizing Apple.
In the meantime, Huawei stands to gain from any potential iPhone bans, as the company seeks to regain market share with its competitively priced Mate 60 smartphone line, particularly in comparison to Apple’s offerings. Huawei’s smartphone business has faced difficulties due to U.S. sanctions, particularly in areas such as 5G technology.
Summary
In the lead-up to the highly anticipated iPhone 15 launch, Apple’s stock faces a turbulent week with declining share prices. Investors are concerned about the potential impact of a reported ban on government officials in China using iPhones for work. We delve into expert insights, technical analysis, and business fundamentals to assess the outlook for Apple’s stock. While challenges loom, opportunities emerge as well. Discover the intricate dynamics and potential consequences for both Apple and the Chinese smartphone market, with a glance at Huawei’s resurgence amid these developments.
Read more: https://truereviewmagazine.com/
