Apple share price plummets amid fears that iPhone demand is dropping

Muriel Colon
November 15, 2018

Based on Lumentum forecast, analysts have deduced that there is an 18 to 20 million reduction in iPhone orders from Apple.

Shares of Qorvo fell 2.3 percent, while Apple was down almost 1 percent in early trading. Noted Apple analyst Ming-Chi Kuo has cut expectations for iPhone XR sales for the next few quarters by between 30 and 35%.

Adding to Monday's negative news, Longbow Research cautioned that Apple is facing weak iPhone demand in China. But when a sale does happen, suppliers get a one-time payment for their component, while Apple can generate hundreds of extra dollars per gadget.

"Suppliers are more dependent on volume than Apple", said Woo Jin Ho, an analyst at Bloomberg Intelligence.

Apple - for the first time ever - refused to release sales numbers for the XR, XS, and XS Max during its recent earnings call, but other industry sources point to the new iPhones (and the XR in particular) not meeting sales expectations.

Apple said earlier this month it would stop giving the number of iPhones, iPads and Mac computers it sold in a quarter, a closely watched metric and a key indicator of the company's success.

With the iPhone XR being as it is, the Huawei Mate 20 series is providing an alluring alternative, which is hurting Apples potential sales.


The driver of the projected sales slump is that Apple's new $749 phone, the lower-end iPhone XR, might not be the hot seller that Apple had hoped, and the company may be cutting orders for the device.

Both Lumentum and IQE are part of the supply chain for those chips, which are used in iPhones.

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. Apple said it preferred to focus on the company's transition to a services company, with regular recurring revenue.

More recently, Apple launched a new version of its operating system, iOS 12, that supports an unprecedented 28 of the company's devices, including models that went on sale in 2013.

Citi also cut its target on Qorvo on Monday due to iPhone XR weakness.

Specifically, iPhone sales last quarter remained stagnant while revenue from iPhone sales jumped by a whopping 29%.

"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".

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