Apple may be the only public US company to hit a valuation of $1 trillion last year, but they are just as vulnerable as everyone else to the volatility of the stock market and international trade. Indeed Apple was having its best year ever until shares collapsed in the fourth quarter, confirming fears about market instability that continued to drag the stock down further to lower its Wednesday forecast. As such, Apple Chief Executive Tim Cook has confided that the tech giant will have to report much lower sales than they had previously expected, mostly as a result of slower iPhone sales and increasing pressures in China.
In a statement, Cook wrote that the company certainly anticipated a few challenges in those key emerging markets, like China. What they did not foresee, he explains, is the magnitude of the overall economic deceleration, especially in China. As a matter of fact, he notes that most of the company’s revenue shortfall—and more than 100 percent of the “year-over-year-world-wide revenue decline” tracked through iPhone, Mac, and iPad sales in Greater China.
Taking a look at the numbers, Apple (AAPL) halted its stock in after-hours trading, just before Cook made his announcement. Then, immediately following his announcement, the stock shed 8 percent of its value, in late trading when they removed the halt. Actually, through the first half of hour when trading resumed, Apple shares were showing, mostly, down 7 or 8 percent. This, of course, adds to the more than 31 percent the stock has lost in just the past three months.
It is important to keep in mind, however, that the S&P 500 is down more than 14 percent over the same fiscal quarter. But also, other tech stocks lost value in late trading, too, once Apple made the announcement. Of course, Apple suppliers were particularly vulnerable: Qorvo In (QRVO), Skyworks Solutions Inc (SWKS) and Broadcom Inc (AVGO) were all down an average of 5 percent, as of 6pm, Eastern time on Wednesday.
But other members of the FAANG stocks all showed poor performance. Facebook Inc (FB) was down about 1.6 percent; Amazon.com Inc (AMZN) lost about 3 percent; Alphabet Inc (GOOG) showed a decline of nearly 2 percent, with Google (GOOGL) down almost the same; and Netflix (NFLX) was down approximately 3 percent. Even Microsoft was down more than 2 percent.