- Apple shares sank as much as 3.2% early Tuesday after the company announced it will miss its fiscal second-quarter revenue expectations due to coronavirus fallout.
- The outbreak has “temporarily constrained” global iPhone supply and dragged on demand in China, according to a Monday press release.
- Work “is starting to resume around the country,” Apple announced, yet its production lines “are experiencing a slower return to normal conditions than we had anticipated.”
- The stock tumble saw Apple erase as much as $45 billion in market value after Tuesday’s open.
- Watch Apple trade live here.
Apple shares tumbled as much as 3.2% in early Tuesday trading after the company announced coronavirus fallout will cut into its quarterly revenue more than first expected.
The tech giant nullified its previous guidance for the March quarter, citing “temporarily constrained” iPhone supply and weakened demand in China. The Foxconn factories that produce iPhones are gradually ramping up production in the country over the next few months after a mandatory shutdown, creating a temporary product shortage for the flagship product, according to a Monday press release.
Apple’s on-the-ground operations in China will also take a hit in the near term, as all of its stores and several partner stores were closed to prevent further contagion. Some locations have since resumed operations, but with reduced hours and weaker customer traffic. The company plans to reopen its retail locations “as steadily and safely” as it can, according to the release.
The stock slump saw Apple wipe out as much as $45 billion from its market valuation following Tuesday’s open.
The guidance issued in Apple’s previous earnings report “reflected the best information available at the time as well as our best estimates about the pace of return to work” after the extended Lunar New Year holiday, the company said.
“Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” Apple added.
The virus’ death toll sits at 1,873 people as of early Tuesday, with more than 72,000 infected. Coronavirus has now spread to 26 different countries. Five deaths have been reported outside of mainland China: one in Japan, one in Hong Kong, one in the Philippines, one in Taiwan, and one in France.
The company’s fiscal first-quarter earnings topped expectations in late January and forecasted “wider-than-usual” revenue in the quarter ending in March due to coronavirus uncertainties. The outbreak has since crippled several other companies’ operations in China, from Starbucks closing thousands of locations to Tesla halting production at its Shanghai Gigafactory.
The news doesn’t seem all bad for the Cupertino, California-based company, Goldman Sachs analysts wrote in a Monday research note. The bank lifted its guidance for Apple’s volume expectations in the second half of 2020, assuming some revenue lost in upcoming quarters “materializes later as new devices launch.”
Apple’s increasingly important Services business will face few headwinds from the outbreak, the Goldman Sachs team led by Rod Hall added.
Apple closed at $324.95 per share on Friday, up 11.5% year-to-date.
The company has 28 “buy” ratings, 15 “hold” ratings, and four “sell” ratings from analysts, with a consensus price target of $337.17, according to Bloomberg data.
Now read more markets coverage from Markets Insider and Business Insider: