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Apple stock slides on slowing iPhone demand

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The Yahoo Finance Live panel discusses Apple warning suppliers of slowing demand for iPhones.

Video Transcript

JULIE HYMAN: We are going to talk about another story that we're following and a stock that we've been following consistently this week, which has really been seeing an interesting move, that's Apple. Apple saw an interesting move upward, this morning it's going in the opposite direction. And this morning, Bloomberg reporting that the company is telling its component suppliers that demand for its suite of products in the iPhone 13, in that line, has been weakening.

And it might be-- it's unclear exactly what's going on here. It seems it might be a factor of people are not finding the products they want. And so they're putting off their purchases, does that mean then that Apple will see an increase in demand down the road? That seems to be the view of analysts who don't seem terribly concerned about this. And you could just say, well, a 3% slide this morning is really a product of it having done so well going into this period. But nonetheless, it definitely catches your eye when Apple, which has so much leverage, is having you know, problems potentially with its supply chain as well, just like everybody else does.

BRIAN SOZZI: Yeah. And you made a good point there Julie, this-- over the past three weeks, I mean, Apple has become the ultimate safe haven stock. Over the past week, Apple is being really amongst the top three trending tickers on the Yahoo Finance platform, and traders have gravitated towards Apple as a safety play. They pay the dividend, they buy back a lot of stock. And the reality is they're going to have probably a very, very, very strong holiday shopping season but this is the type of news that you would think will lead to a blow-off top in Apple shares here as investors realize that Apple has been dealing with these supply chain problems.

The lead times are not where they need to be. But also now they're having to potentially deal with a demand problem on this iPhone. Now, I don't think this news is you know, something that will lead to a 10% to 15% pullback, but this, you could see a little bit of a blow-off top here.

BRIAN CHEUNG: Yeah. Well, I mean, to kind of add to Brian's point, from a qualitative standpoint, if you were watching kind of the Black Friday discounts, it actually shouldn't be a surprise that Apple is acknowledging slower demand. When you take a look at Verizon, for example, heavily discounting iPhones in a buy one, get one deal and you didn't even need to try to re-up or try to get the highest-paid plan as is often the case for previous promotions to get that free iPhone, they were just handing them out. So you did kind of already see as of the end of last week some of the issues from retailers in getting some of this inventory out there.

Now, the other point too though is just kind of something completely secular from the pandemic or from the chip shortage or what have you, which is that I think the product upcycle is a little bit different in these days, where you're not beholden to those two-year contracts anymore. I think a lot of people are just willing to hold onto their phones longer, especially because the cost is a lot higher. But then from a technological standpoint, am I really going to try to update my phone because the camera shifted into a diagonal shape as opposed to in a vertical shape? I don't have an incentive to upgrade from my iPhone 11 to an iPhone 13 with a lot of these marginal upgrades having taken place. So I think that just consumer behavior irrespective of the pandemic might be behind a lot of these trends as well.

JULIE HYMAN: Brian, you need a car that opens doors like this, not like this. I don't know if anybody will get that reference.

BRIAN CHEUNG: I got it.

JULIE HYMAN: And one more thing to mention on Apple, that upswing it's had because I was looking at the stats this morning, it has risen for 11 of the past 13 sessions going into today. So just another little fun stat and bit of context for you.