Apple Shares Drop Following Letter to Investors Blaming Weak Demand in China

The iPhone was once Apple’s biggest boon. Now it’s becoming the company’s biggest headache

"We estimate if China sales went to zero that would reduce iPhone units by -44m and approximately ~$20-$30 per share in Apple stock price", the note stated.

By early 2018, General Motors was selling a third more cars in China than in the U.S. Starbucks unveiled plans to open a new coffee shop in China every 15 hours on average. It made up about 60 percent of the company's revenue in the last quarter reported.

Cook told CNBC that Apple products have not been targeted by the Chinese government, though some consumers may have elected not to buy an iPhone or other Apple device because it is an American company.

Apple's report startled investors who fear a slowdown of the world's second largest economy amid pressure from a trade dispute between Washington and Beijing.

Apple publicly warned previous year that Trump's would increase the price of its products. The company previously projected $89 billion-to-$93 billion in revenue.

Hall says he expects Apple stock to drop to $140, down from his original forecast of $182.

Cook said Apple did not foresee the magnitude of the economic deceleration in China, despite expecting some challenges in key emerging markets. Greater China, a region that includes the mainland, Hong Kong and Taiwan, accounted for most of the revenue shortfall, but iPhone upgrades also weren't as strong as the company anticipated in some developed markets, Cook said.

Apple gave up 9.2 percent following its announcement late Wednesday, which struck a raw nerve with investors. Since trade tensions don't appear to be lessening any time soon, this spells trouble for Apple and other companies that make a lot of money from the Chinese market.

China confirms United States trade talks in Beijing next week
Last year, China and the United States imposed tariffs on more than $300bn (£237bn) worth of each other's goods. Washington has imposed punitive tariffs of up to 25 percent on $250 billion of Chinese goods.

The February crude contract was up 55 cents at US$47.09 per barrel and the February natural gas contract was down 1.3 cents at US$2.94 per mmBTU.

Despite losing ground, the TSX held up better than US markets as gold and oil prices increased. Apple shares have dropped almost 10% as of the time of writing, putting the tech giant on track for its worst daily loss in more than half a decade. Not only are those companies more aggressive on pricing for their higher-end models (since they're not necessarily gunning for Apple-level gross margin), but Chinese vendors also offer a wider range of devices spanning a broader range of price points than Apple does.

This was sharply lower than analyst forecasts of around $91 billion. But he said then that he "would not put China in that category" of countries with troubled growth. What's more, the company has set aside $100 billion for stock buy-back purposes.

This piles on to existing anxiety of a slowdown in global growth, Apple can be used as a proxy to China's growth.

Cook also cited the trade war between the USA and China as another factor.

It may be tempting to pick up Apple on this dip, but investors should be patient as the USA economy looks poised for a sharp slowdown in 2019 and 2020.

The yield on the 10-year Treasury fell to 2.64 per cent. That growth came entirely from higher prices.

Market jitters even extended briefly to the Brexit-battered pound, which tumbled to a 21-month low close to $1.24 overnight against the United States dollar in a "flash crash" triggered by an exodus from currencies considered riskier - before very quickly recovering the losses to return to around $1.26.

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