Oh, how far the mighty have fallen! Apple, the colossal tech titan and perennial golden child of the stock market, finds itself in a deep trough. Following a disquieting downgrade at the hands of Barclays, the company’s shares plummeted by a bewildering 3.6%, plunging to a bleak low not seen for seven weeks. All due to Barclays raising concerns about the demand for Apple’s flagship wares – the iPhone and Mac, for the year 2024.
Yet it’s not just Barclays ruffling feathers – it marks the second brokerage to brandish an unappealing “sell” rating, marking the highest level of gloomy recommendations for Apple in at least two years. This has sent shockwaves rippling through the market, with the broader S&P 500 index suffering a 0.56% hit in the wake of Apple’s decline.
Such a bitter pill to swallow, considering Apple’s astronomical ascension in 2023, where its shares soared nearly 50% to reach record heights. A year where Big Tech reigned supreme. However, all good things must meet their end.
The crux of the matter lies in Apple’s battle to match demand, a challenge that has dogged the company since early 2023. Even worse, Apple’s holiday-quarter sales forecast fell short of Wall Street’s hopes, casting doubts on the company’s future prospects. Not to mention, Apple’s performance in China lagged as local rival Huawei made a formidable comeback.
Barclays’ analyst, Tim Long, voiced concerns about the lacklustre performance of the iPhone 15 and the bleak outlook for the iPhone 16. Echoed worries of tepid demand in developed markets, painting a dreary image for Apple’s flagship offering.
But that’s not all – Barclays also raised alarms for Apple’s services business, once a bright spot amid the company’s hardware struggles. With growing scrutiny and challenges in various countries, including the United States, over app store policies, the once-thriving services business now faces a sea of uncertainties.
The ramifications of this downgrade were swift and brutal, with Apple suffering a colossal loss of over $100 billion in market value. As the dust settled, the company’s shares closed at a modest $185.64, a far cry from its former heights.
In light of these events, Barclays opted to saddle Apple with an “underweight” rating, down from its previous “neutral” stance, and slashed its 12-month price target to a modest $160. A surprising move, as Itau BBA had been the only bearer of the “sell” rating on Apple since July 2022.
Despite the gloomy outlook, the majority opinion among analysts still leans towards a “buy” rating for Apple, with a median price target of $200. However, Apple’s current valuation of approximately 28.7 times its 12-month forward earnings estimates is notably higher than the S&P 500’s 19.8, raising concerns about the company’s lofty valuation.
As the commotion of this tumultuous downgrade fades, Apple’s future remains obscured in uncertainty. Will the tech titan triumph over adversity or is this the commencement of a downhill slide? Only time will tell. At present, one thing is certain – the once-untouchable Apple is confronted with a tempest unlike any it has weathered before.
