Apple Inc., the world’s largest company by stock value, enjoyed a great first half of the year—and then it dropped. Can the new edition of the iPhone, launching Tuesday, turn things around?
The company’s share performance is important because, as the leader of the Magnificent Seven tech titans, it has a major bearing on the entire market’s direction. As of Monday’s close, Apple was down 9.2% since its peak on July 31. By no coincidence, the S&P 500 topped out that day, too, and has lost 2.2% since.
As of Monday, both Apple and the index were ahead about 0.7%. Part of the Apple share rise appears to be related to the upcoming debut of the iPhone 15. A new iPhone release has prompted an increase in Apple stock every time since the first one arrived in 2007, averaging a 14% gain after six months, according to Barron’s.
“The iPhone 15 is set to bring design and feature updates, and we think that the design changes” will result in higher sales, wrote Amit Daryanani, a senior managing director at Evercore ISI, in a report.
Nonetheless, Apple has to overcome some headwinds. In its quarter ending July 1, overall sales fell 1.4%, and iPhone sales, which make up almost half of the total, slid 2.4%. In addition, the Chinese Communist Party announced last week that government employees could no longer use Apple phones (or those from any other non-China-based producer).
While analysts predicted the ban would have little impact, investors grew concerned that it was a prelude to a wider prohibition. China accounts for 18% of Apple’s revenue.
The iPhone downtick tracks weakness for smartphones overall: The product’s shipments globally dipped 6.8% in the quarter that ended June 30 from the same period one year earlier, marking the eighth straight quarter of year-over-year contraction, per International Data Corp.
The IDC analysts cited “soft demand, inflation, macroeconomic uncertainties and excess inventory” for the general smartphone slump, although they added that the rate of decline seemed to be slowing.
Tags: Apple, China, Evercore, International Data Corp., iPhone, Magnificent Seven, S&P 500