Oh my, Apple’s stock certainly didn’t have the smoothest start to the new year. The first trading day of 2023 dealt a heavy blow to the tech giant’s stock, sending ripples of worry through the entire US stock market. Talk about a sour note to kick off the year!
Apple’s shares plummeted by a staggering 3.6% after Barclays decided to give the stock an “underweight” rating, downgrading it from its previous “equal weight” status. Ouch. To add insult to injury, Barclays even slashed its price target for Apple, dropping it down to $160 from $161.
What’s the reason behind this dramatic downgrade, you ask? Well, according to analysts, it seems that Apple’s sales of the new iPhone 15, especially in China, just didn’t meet expectations. Customers didn’t seem all that thrilled about upgrading, since the new features in the latest model were rather lacklustre. And if that wasn’t enough, it’s anticipated that the next-generation iPhone 16, due later this year, will only have minor upgrades. Let’s hope these upgrades will be enough to get the sales back on track.
But wait, there’s more bad news. Apple’s services business, which includes Apple TV+ and Apple Music, is also expected to take a hit. It looks like the company is facing some serious challenges, not just with its hardware but also with its services.
This is just another tough time for Apple. Just a few weeks ago, the company had to pull its most advanced Apple Watch models off the US market due to a legal dispute over patents. What a headache! Thankfully, after a bit of back and forth in the courts, Apple was able to resume selling the Apple Watches. Phew!
And here’s the kicker. It’s not common for analysts to give a “sell” or “underperform” rating to a company as big as Apple. But hey, here we are. According to a research paper from the Journal of Accounting, Auditing and Finance, only 9% of all stock recommendations fall under the “sell” or “underperform” category.
The drop in Apple’s stock had a ripple effect, dragging down the broader market. The S&P 500 and Nasdaq Composite both took a hit, closing down by about 0.6% and 1.6%, respectively. Definitely not the start the market was hoping for.
But hey, it’s not all doom and gloom. While Big Tech might be in for a bit of a rough patch, some investors are feeling optimistic about the broader market. With the possibility of the Federal Reserve cutting interest rates, and hopes for an economic rebound, there’s a chance that the stock rally could pick up some momentum. That could mean that some investors will shift their focus away from tech giants like Apple and onto stocks that could benefit from a resurging economy.
So, while Apple might be facing a tough road ahead, the stock market is full of surprises. Who knows, maybe things will turn around sooner rather than later. Let’s keep our fingers crossed and see how things play out!
