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Apple shares hit rock bottom as investors lose faith

by on07 March 2024

Mimicking Microsoft under Steve Ballmer

Apple's share price has fallen for the last few weeks. Today, it hit a low for the year, closing at €156.86.

The cocaine nose jobs of Wall Street are gloomy on the company's prospects for various reasons. After a year of shrinking revenue in 2023, Apple bosses forecast only feeble growth guidance at its February earnings call. There were more signs today in the critical Chinese market that a recent run of hot iPhone sales has fizzled out.

 Investors are fuming over the EU's €1.84 billion fine for 'illegal' App Store policies, threatening future services revenue growth.

During its February earnings call, Apple's China sales missed analyst estimates by more than €2.76bn. Today's China news suggests iPhone sales were down 24 per cent in the first six weeks of 2024 compared to a year ago.

The report has spooked investors into believing there will be a lasting iPhone sales slump this year, with local smartphone makers like Huawei becoming increasingly popular again.

On Monday, Apple stock nosedived almost three per cent following the news of the EU fine. The EU declared Apple's anti-steering policies as illegal. Investors fear that more App Store policy changes are driven by regulation from pressure worldwide, which will slash Apple's Services growth trajectory with lower commissions from In-App Purchase.

Overall, AAPL stock is down 8.3 per cent so far this year and is almost 13 per cent off its all-time high set at the end of last year.

All this has been happening as the general trend for most big tech stocks has been positive, with an artificial intelligence hype train-fuelled rally. For instance, Microsoft stock is up 8.5 per cent this year. And the stock of AI chip maker Nvidia has soared 78 per cent in 2024 alone, with its market cap valuation approaching Apple in size.

In contrast, Apple is seen to have been caught with its pants down on AI, having not announced any major generative AI products. The Tame Apple Press believes it will announce something in June, with iOS 18 getting AI integration. This is light years behind everyone else and will not provide noticeable services to fanboys.

In a rare move, Apple boss Tim Cook teased that Apple had major AI announcements in the pipeline during its last quarterly earnings call; these comments were doubled down on at its annual shareholders meeting held last week. The company is conscious of the narrative that it is behind and is keen to break it.

However, more cynical types believe that after two years of fairly flat financials, Apple has become like Microsoft was under the delightfully understated Steve [there's a kind of hush] Ballmer. Sure, it makes piles of dosh, but it is not making anything new or exciting and is not growing enough. It is also picking fights with regulators over anti-trust issues, which, deep down, it knows it is in the wrong about. 


Last modified on 07 March 2024
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