- Apple shares plunged Monday following the announcement by COVID that a key Chinese factory has seen its output drop.
- Apple indicated that it expects iPhone 14 Pro Max and iPhone 14 Pro Max to ship at lower levels than it originally anticipated.
- Dan Ives, analyst at Wedbush said it was an “absolute gut punch” for Apple during its most important holiday quarter.
AppleMonday’s shares plunged after the tech company said that COVID-19 Chinese restrictions had caused a reduction in the work required to produce its latest iPhones. This is a warning sign as the holiday season nears.
Premarket trade saw the stock fall by 2% to $135.56. More than 1,000,000 shares were traded before Wall Street’s opening bell. The stock has fallen 22% in 2022.
After the announcement, shares fell Apple announces Sunday’s announcementDue to a “significantly decreased capacity”, the factory in Zhengzhou China, a primary manufacturing site, is currently operating at “significantly lower” levels. Coronavirus restrictions at this plant
“We are still seeing strong demand for the iPhone 14 Pro Max and iPhone 14 Pro Max model. Apple released a statement saying that we now expect iPhone 14 Pro Max and iPhone 14 Pro Max shipments to be lower than we anticipated. Customers will also experience longer waits for their new products. The statement by Apple did not specify the impact on output.
“After fighting the macro headwinds, and delivering strong September quarter/guidance that is in stark contrast to other Big Tech, this new zero-Covid situation for Apple in its most crucial holiday quarter is an absolute gut punch,” Dan Ives, Wedbush analyst, wrote in a note on Monday.
We would predict that this will negatively impact about 3% of iPhone sales this quarter, based on China supply/production issues. Ives said that Zhengzhou would have to maintain a lower capacity for the next few days, which could cause iPhone Pro shortages in the critical Christmas period in the US. Wedbush retained its outperform rating as well as its $200 price target on Apple.
Separately, Bloomberg reportedApple said Monday that it expects to make at least 3,000,000 fewer iPhone 14 handsets in 2014 than it had expected. This is according to people who are familiar with Apple’s plans. This is due to lower demand for the iPhone 14 Plus and 14 Plus models, which are more affordable than the Pro models.
According to the report, Apple and its suppliers had a goal of making 87 million devices. This is in contrast with their previous goal of 90 million.
The markets have been abuzz with speculation that China may be rethinking its zero-COVID policy, which has put millions of Chinese citizens and businesses under lockdown in an effort to combat infections. However, a Chinese health official confirmed that the country will continue to adhere to the policy on Saturday. CNN.
CNN reported that Hu Xiang (a official with the disease control agency) stated, “Practice has shown that our pandemic prevention-control policy and a number of strategic measures were completely correct” when asked if China would change its COVID policies.
