Apple (AAPL) is now down almost 20% from its all-time high.
The company, still the largest publicly-traded company in the world, now has a market cap below $900 billion. Earlier this year, Apple became the first company with a market capitalization north of $1 trillion.
And since the company’s disappointing quarterly earnings and the announcement that it would no longer report iPhone unit sales, both investors and Wall Street analysts have soured on the stock.
Since reporting earnings on November 1, shares of Apple are down more than 10%. And Wall Street analysts continue to pare their expectations for the company as Apple suppliers make the outlook for the iPhone even murkier.
On Wednesday, UBS cut its price target on Apple shares to $225 from $240, saying that Apple has likely taking around 6-7 million units out of its initial expectations for a build of around 63 million new iPhone models, split evenly between the XR and XS models.
The firm added in its note that there remain downside risks to Apple’s iPhone outlook, with guidance cuts from Apple suppliers Lumentum (LITE) and Qorvo (QRVO) painting an even more negative picture than the firm’s baseline expectations for a reduction in iPhone orders.
“We think there is an inventory component that is still negatively affecting the supply chain,” UBS said, indicating that Apple may be as many as 10 million units shy of what Wall Street had initially expected.
Earlier this week, Goldman Sachs cut its outlook for iPhone unit sales as a result of Lumentum’s negative guidance, writing that, “While Apple may have already contemplated some weakness in its
guidance, we feel the timing and magnitude of the [Lumentum] reduction suggests Apple is
seeing incrementally worse demand data.”
Robert Cihra at Guggenheim on Wednesday downgraded shares of Apple to Neutral from Buy and the firm removed their price target on the stock; previously, Guggenheim had a $245 price target on shares.
“A year ago AAPL looked like a table-pounder when iPhone units were weak,” Guggenheim wrote in its note on Wednesday. “But [these results are] about to be more than offset by a big jump in ASPs (+17%Y/Y in FY18), which ultimately drove Apple’s best iPhone revenue growth in 3 years, we rather now find that setup flipped with ‘growth via ASPs’ widely known but just as those ASPs start to anniversary.
“Over the past 10 years, Apple’s iPhone ASP has increased a dramatic $220, or 40%, reflecting its growing value to both consumer and business markets, but nearly HALF of all that just came in FY18 alone, making a period of digestion now likely.”
Stripping out some analyst-speak, Guggenheim thinks the story of ever-more-expensive iPhones has already been priced into the stock, with investors now growing concerned over slowing overall iPhone sales. Which, of course, comes right as Apple stops reporting individual unit sales. And right as its suppliers start suggesting these unit sales may be even worse than forecast.
And that the story around Apple, a company that makes billions in profit each quarter and sells hundreds of millions of iPhones each year, has become so touchy that news from its supply chain is shaking the market’s faith in the world’s largest company also indicates how fragile this market has become.
As Bloomberg’s Andrew Cinko noted Wednesday, Apple’s correlation with the S&P 500 is double what it was last year and far larger than what it was in 2013-14 when Apple shares fell about 30%. Which means as the market goes, so goes Apple.
“This year Apple well and truly is the stock market once again,” Cinko writes, “and its price action lately has been stirring up troubling signs about what might be next for equities.”
Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland