- Tram Ho
For Apple Inc., the most valuable company in the United States today, the Covid-19 crisis raised many urgent questions about both supply and demand.
On the supply side, many factories in Apple’s production chain in Asia have remained closed since the Chinese New Year when the coronavirus acute respiratory infection started in China. The closed production chain included the iPhone assembly plants, Apple’s biggest money-making machine, leaving the tech industry giant struggling.
Against this backdrop, China has implemented a blockade to control the disease, some Apple factories here still maintain operations; However, this picture is not very bright.
It seems that at the moment, Apple has delayed the release of more information about the cheaper iPhone SE2 model and is expected to launch … in March.
When Covid-19 broke out in many parts of the world and put economies in crisis, the question of whether consumers are still willing to spend a large amount of money on Apple phones. is definitely causing CEO Tim Cook to have a “headache”.
Apple had a big win before Covid-19 broke out. The company announced record sales in the previous shopping quarter and revealed the expected launch of the first 5G iPhones in September. But at the present time, the storm called Covid-19 may cause the tech giant to “reconsider”.
Similarly, questions about the consumer market are raised for most other Apple products such as iPads, Macbook, even headphones. However, Apple’s services will probably remain stable as most people stay home, they will have more access to the App Store, Apple Music or video and games services on Apple devices.
What do the numbers say?
Revenues : Apple expects its revenue to reach between $ 63 and $ 67 billion in the quarter ending in March. The previous optimistic situation led by the end of January, FactSet analysts forecast its revenue could reach 65.1 billion USD. However, after the end of the first quarter, the forecast is only 57.3 billion USD. Forecasting for the entire fiscal year 2020, experts say that the company’s revenue will only reach about 270.45 billion USD; down from the forecast of 273.88 billion USD at the end of January.
Profit : Analysts predict Apple’s current profit is only about 2.45 USD / share; down from the forecast of US $ 2.71 / share at the end of February and US $ 2.99 / share in January. For the entire fiscal year 2020, analysts expect Apple stock to increase to a maximum 12.83USD / share. Of course, this figure also fell compared to the forecast of 13.8 USD / share at the end of January.
Stock volatility : Apple shares plunged 13.4% in value in the first quarter of 2020 when the Dow Jones industrial index fell 11%.
What do the Apple leaders say?
Feb. 17 : Apple representative discloses demand for Apple products in China is heavily affected by the outbreak of Covid-19 in the country. Apple shut down all its stores in China at the time and fears of lower consumer confidence even when the stores reopened. At the same time, it also issued a warning about the global iPhone supply may be delayed due to slower than expected production after the Chinese New Year holiday. The shortage of iPhone supply will cause Apple’s revenue is affected in the first quarter.
February 27: Sharing on Fox Business, CEO Tim Cook revealed that Apple factories in Asia are strengthening production activities again after the long Tet holiday.
March 13: Apple announces that it will temporarily close its stores around the world except for fear of the serious impact of the disease. “We don’t know for sure when the epidemic peaks, and the risks are always there,” the company said.
April 5 : CEO Tim Cook said in a Twitter post that Apple seeks to produce about 1 million masks a week for health workers. To date, the company has donated more than 20 million masks to the health sector across the United States.
What do analysts say?
Aaron Rakers – Wells Fargo analyst : “From a supply perspective, we are seeing positive numbers from the Chinese market. For example, Foxconn reported production capacity increased faster than expected. Moreover, Wall Street is ready for investors to accelerate after March. However, investors should temporarily accept Apple’s stock price is about 30% lower than initially expected. ”
Katy Huberty, an analyst with Morgan Stanley : “Apple is facing a” negative leverage “reaction from consumers when they close stores because the company maintains payroll for retail employees. and invest according to the roadmap in the period without current revenue “. At the same time, she also lowered the forecast of Apple stock price from 368 USD to 328 USD in March but still maintained a high ranking for this stock.
Kyle McNealy – Jefferies analyst : “Although we can not change these numbers in a more positive way, consider the positive impact of the service segment when most home users as currently This may offset the downward pressure on sales by closing stores. ” He reduced the forecast for Apple stock from US $ 370 to US $ 320 and confirmed that this is still a worth buying stock.
Timothy Arcuri – UBS analyst: “Supply chain challenges have made way for concerns about global demand. If this situation continues until June, Apple will likely have to postpone its release. iPhone 5G launch this fall. However, this is still worth buying and I reduced the forecast for this stock from 355USD to 335USD. ”
Daniel Ives – Wedbush analyst : “Apple will see a couple of declines, but there will be no big drop in demand because it is promising to launch a new feature like never before. iPhone products “. He predicts that Apple’s stock price may remain at $ 335 per share and this is still worth buying. At the same time, Wedbush experts hope that the launch of the 5G iPhone may delay as late as this year’s holiday season.
Source : Genk