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Revisiting Apple's iPhone Woes as Stock Dips Into Bear Market Territory
Apple Inc. (NASDAQ: AAPL)’s stock has entered bear market territory, with the performance of its newest iPhone models largely to blame.
The stock has pulled back by about 20 percent from an Oct. 3 intraday high of $233.47.
Apple shares have underperformed since October, having shed about 17 percent on a closing basis compared to more modest declines of 7.3 percent in the S&P 500 Index and 11.3 percent in the Nasdaq Composite Index.
Although some of the weakness could be traced back to a market-wide sell-off triggered by macroeconomic, monetary policy and geopolitical concerns, much of it has to do with sagging iPhone volumes.
The Ailing iPhone
Ever since Apple launched its latest iterations of iPhones —the XS, XS Max and XR — it has been scaling back production estimates.
Over the past week alone, the company scaled back estimates by 6-7 million from the original 63-million build target for the new models, UBS analyst Timothy Arcuri said in a Wednesday note.
The cut is evenly split between the XS Max and XR models, he said.
Longbow Research analyst Shawn Harrison said in a note released earlier this week iPhone orders are down 20-23 percent year-over-year. Another factor portending to further weakness ahead is the sharp drop in Baidu October iPhone searches in China, arguably the biggest market for the smartphone, the analyst said.
UBS estimates calendar Q4 iPhone sell-in to retailers of 73.5 million, down from the previous estimate of 75 million. The sell-through is expected to drop 3 percent year-over-year, assuming a 2-million channel build. UBS lowered its ASP estimate …