Apple Analysis and Talking Points
- Apple Warning Weighs on S&P and Nasdaq
- Companies Exposed to Apple
Apple Warning Weighs on S&P and Nasdaq
Last night saw Apple provide its first revenue warning in over a decade, confirming the view that global growth is indeed slowing, having cut its revenue guidance to $84bln, down from $89-93bln. The tech giant highlighted that Q4 sales and demand for iPhone’s in China had been slowing with CEO Tim Cook noting that US-China trade wars had put an additional pressure on the Chinese economy. Following the announcement, Apple shares dropped over 7%, adding to the 30% plunge seen since October 1st, resulting in a market cap loss of over $300bln, since topping $1tln. Consequently, the S&P 500 and Nasdaq are noticeably weaker, with the latter falling some 2.7%. Of note, Apple is the 3rd largest stock in the S&P 500, behind Microsoft and Amazon.
Apple Price Chart: Daily Time Frame (Feb 2018 – Jan 2019)
Companies Exposed to Apple
The fallout from Apple saw iPhone makers pressured in the Asian session with the likes of Hon Hai and Pegatron, which generate 45% and 61% of its revenue from Apple, dropping 1.7-1.9%. Elsewhere, other Apple exposed stocks include European chipmakers, which tumbled across the board. AMS plunged 12%, while Dialog Semiconductor and STMicroelectronics dropped 7% and 4.2%, respectively. Consequently, with lower sales expected for iPhone units, this will likely provide a revenue headwind for the chipmakers and as such, spark a wave of lower profit guidance from exposed stocks going forward. Of note, Dialog Semiconductor has around 75% exposure to Apple, while AMS and STM have roughly 40-45% and 10-15% exposure.
--- Written by Justin McQueen, Market Analyst
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