Apple, one of the world’s top tech companies, is experiencing more sluggish trading than it’s accustomed to. The lag is likely due to the ongoing trade war.
While Apple’s third-quarter earnings were higher than expected, the company’s stock is only mildly elevated. Investors still seem shaken by sluggish sales Apple saw earlier in the year during May and August when the trade war intensified.
Apple’s CEO Tim Cook remains optimistic. On an earnings call, Cook pointed out that the decline is slowing down and its revenue in China is better than it was previously. Meanwhile, analysts have been giving Apple glowing recommendations. However, stock prices have not responded and remain less than expected on Thursday.
Reports suggest that China is unsure about a long-term trade resolution with the U.S. If proven to be the case, Apple’s supply costs could be higher and iPhone sales may not be as brisk as hoped for.
During after-hours trading, Apple saw shares traded as high as $252. However, shares fell back down to $248 early Thursday at just 2.3 percent higher.
Jim Suva, a senior tech analyst for Citi, said: “Macroeconomic conditions or shifting consumer demand could cause greater-than-expected deceleration or contraction in the handset and smartphone markets. This would negatively impact Apple’s prospects for growth.”
Wall Street has repeatedly stated that it believes Apple is one of the top companies that are likely to remain fragile during a full-blown trade war. Previous reports estimate that 20 percent of Apple’s revenue comes from China.
Dan Ives, Wedbush Securities managing director of equity research, said that “…if the tariffs came through and there was no deal, that would take about 6 percent to 8 percent of U.S. demand from an iPhone perspective.”
Cook says that trade tensions are improving and that China is receiving Apple’s products well. “The tone around tariffs has changed significantly”, he said.
Apple is experiencing less of a revenue decline, which does point to more stabilization. But, analysts remain cautiously optimistic, pointing out that Apple might see a few more declines before all is said and done.
Apple’s not wavering on its optimism, instead, forecasting positive holiday sales. Revenue in its services and wearables divisions have been glowing, even while iPhone sales are less than expected.