Apple is no longer ‘immune’ to the crisis: Market capitalization drops to $ 2 trillion, profits are expected to decline after 14 consecutive quarters of growth

Tram Ho

Apple has just experienced a long slide “wiping” about $ 1 trillion in market value.

Apple hết ‘miễn nhiễm’ với khủng hoảng: Vốn hoá tuột mốc 2 nghìn tỷ USD, lợi nhuận dự sẽ giảm sau 14 quý tăng trưởng liên tục - Ảnh 1.

 

Apple’s market capitalization fell below $2 trillion in today’s trading, marking a long slide that wiped out about $1 trillion of the tech giant’s market value, according to the Financial Times. .

This is in stark contrast to the first trading days of 2022, when Apple became the only company to hit a $3 trillion valuation. At that time, many people were optimistic and began to speculate about the time when Apple and its competitors hit the $5 trillion mark.

“I consider what happened at the end of the year as a ‘waking up’ of the technology industry after what was experienced throughout 2022,” said Professor Lee, founder of investment network 37 Angels. .

While still performing better than its peers, Apple still lost 27% of its value after 12 months of market volatility. The drop was less than a 33% plunge in the tech-heavy Nasdaq Composite, as investors worried about recession risks and the prospect of a multiyear monetary policy reversal.

Despite the pandemic, the iPhone maker’s business recorded many positive numbers with 14 consecutive quarters of growth. As of September, the company also achieved record revenue of 394 billion USD, while net profit reached nearly 100 billion USD.

According to Counterpoint Research, the company shipped only 14% of all smartphones globally in the first nine months of the year, but they accounted for 43% of total sales and 82% of total profits – the highest rates ever recorded. received since 2015.

However, after disruptions at the super-factory in Zhengzhou, experts began to have bad feelings about Apple. Net profit is expected to drop by 8%.

Apple hết ‘miễn nhiễm’ với khủng hoảng: Vốn hoá tuột mốc 2 nghìn tỷ USD, lợi nhuận dự sẽ giảm sau 14 quý tăng trưởng liên tục - Ảnh 2.

The technology sector is particularly affected by the Fed’s decision to raise interest rates

“China’s current anti-epidemic situation is a key factor in determining Apple’s business results in 2023,” said Tom Forte, an analyst at DA Davidson & Co.

“People are not good at predicting the future. The pandemic is actually a black swan event and none of us know what will happen in the future,” said Angela Lee, a professor at Columbia Business School.

In addition, according to Michael Lippert, vice president and portfolio manager of a hedge fund, Apple is being overvalued, while innovation and breakthrough are fading.

“When was the last time, seriously, Apple made an amazing innovation for the iPhone?” Lippert asked. “The products that came out later were only marginally better.”

It is known that the technology sector is especially affected by the Fed’s decision to raise interest rates, which is much more sensitive than other fields. That’s because many tech companies rely heavily on access to capital to pursue ambitious projects before they even turn a profit.

“We were overly optimistic about the short-term growth of the Internet economy, while underestimating the impact of the broader downturn,” Patrick Collison, Stripe CEO, wrote in a note. sent employees last month.

According to the Financial Times, Apple was the first publicly listed company to reach a market capitalization of $ 1 trillion in August 2018, and also the first corporation to be worth $ 2 trillion in August 2020. No tech company is currently worth more than $2 trillion, and Apple remains the dominant Silicon Valley giant, followed by Microsoft with $1.8 trillion.

According to Bloomberg, Apple is the most valuable company in the world, so it’s no surprise that it generates more profit than any other S&P 500 company. The distinction helps it win popularity. Investors’ trust also comes from the management and use of huge revenue.

Apple hết ‘miễn nhiễm’ với khủng hoảng: Vốn hoá tuột mốc 2 nghìn tỷ USD, lợi nhuận dự sẽ giảm sau 14 quý tăng trưởng liên tục - Ảnh 3.

Apple’s market cap just dropped below $2 trillion.

Over the past five years, the company has generated $454 billion in cash from operations. Instead of using it to buy back big companies, Apple pays dividends and pleases shareholders. That’s more than Exxon Mobil Corp’s market value. or JPMorgan Chase & Co.

“Apple could have done all the things the bank expected, like buying Netflix or Disney. Instead, they return capital to shareholders, and they’re celebrated for that,” said Kimberly Forrest, founder and chief investment officer of Bokeh Capital Partners LLC, an asset management firm that owns Apple stock. , said.

Apple’s loyal customer base is also an important factor. There are now more than a billion iPhone devices in use, along with iPads, Macbook computers and smartwatches. Besides, thanks to the growing number of services, such as cloud storage, Apple has created a strong ecosystem for itself.

“Once you have used Apple products and services, it is very difficult to give up. People won’t switch to Android just because they can’t buy an iPhone this month. They will accept to wait,” said Jason Benowitz, senior portfolio manager at Roosevelt Investment Group LLC, an Apple shareholder. Also, according to Benowitz, Apple benefits quite a bit from the expectation that wealthy customers will continue to spend money on premium products, even during a recession.

“Apple compared to other names still offers safety. It’s not entirely hardware dependent, as the company can periodically earn money from customers subscribing to Apple Music or Apple Arcade for video games,” said Lewis Grant, portfolio manager senior at Federated Hermes Ltd. said.

By: FT, Bloomberg

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Source : Genk