Apple's stock price is likely to record its largest drop after earnings in 13 years, with a market value potentially evaporating by $460 billion
Affected by supply chain pressures and rising memory costs, Apple's earnings report guidance is weak, with the stock price dropping by as much as 9.3% in early trading, potentially evaporating $460 billion in market value. If the decline persists, it will mark the largest drop after an earnings report in 13 years. Analysts point out that the company's underestimation of demand has led to early procurement of components. Although facing challenges of declining profit margins, its market position remains solid
Investors are reacting negatively to Apple's weak earnings guidance provided in its financial report, which stems from supply chain pressures, with the stock price dropping as much as 9.3% in early trading on Friday.
Apple acknowledged that high memory prices and supply chain constraints are expected to weigh on profit margins. The company anticipates a gross margin of 47% to 48% for the September quarter, down from about 50% in the June quarter, even including a positive impact of approximately 1 percentage point from tariff refunds. CEO Tim Cook stated during the earnings call that the company is facing very significant constraints, with limited flexibility in the supply chain to remedy the situation.
Supply constraints may also erode revenue opportunities for iPhone, iPad, and particularly Mac. Apple's revenue outlook suggests a growth rate of 9% to 11% for the September quarter, below the FactSet consensus expectation of over 12%. Evercore ISI analysts noted that investors may find it difficult to accept the company's profit margin trajectory for the second half of the year.
Analysts believe that part of Apple's predicament stems from its own success, as it underestimated demand, particularly strong Mac sales, which forced them to procure advanced components ahead of time. Bernstein analysts noted that while the pressure from memory costs is concerning, Apple's position remains unmatched.
If today's decline persists until the close, it would mark Apple's worst post-earnings performance since January 24, 2013 (when the stock fell 12.4%), and the largest single-day drop since March 16, 2020 (when it fell 12.9%). This drop could result in a market value evaporation of approximately $460 billion. Even with this decline, Apple's stock price has still risen about 11% year-to-date
