Apple shares fell on Monday after Apple said China’s COVID-19 restrictions had led to relief in production frames for its newest iPhones, a warning that comes as the holiday season approaches.
Inventory fell 2% to $135. 56 in the premarket with more than a million inventories traded ahead of Wall Street’s opening bell. Shares are down 22% in 2022.
Stocks retreated after Apple said on Sunday that its plant in Zhengzhou, China, a major production facility, operates at “significantly reduced capacity” due to coronavirus restrictions at the plant.
“We continue to see strong demand for the iPhone 14 Pro and iPhone 14 Pro Max models. However, we now expect shipments of iPhone 14 Pro and iPhone 14 Pro Max to decline from what we expected in the past and consumers enjoy longer wait times to get their new products,” Apple said in an Array. The company did not specify the amount of production that would be affected.
“After battling macro headwinds and delivering a solid quarter/guidance in September in stark contrast to the rest of Big Tech, this new zero-covid scenario is an absolute blow to Apple in its peak holiday quarter,” Wedbush analyst Dan Ives wrote in a note early Monday.
“With demand remaining strong during the holiday season, we estimate this has a negative effect on approximately 3% of iPhone sales this quarter due to production/supply issues in China. If Zhengzhou continues with reduced capacity in the coming weeks, it would lead to an apparent shortage of iPhone Pro in the very vital holiday season, especially in the United States,” Ives said. Wedbush maintained its superior performance score and its $200 value target at Apple.
Separately, Bloomberg reported Monday that Apple plans to produce at least 3 million fewer iPhone 14 phones than planned this year, according to other people familiar with the company’s plans. The reduction basically comes from declining demand for iPhone 14 and 14 Plus models that are less expensive than high-end Pro models.
Apple and its suppliers had aimed to make 87 million devices or less, up from a previous target of 90 million units, according to the report.
There has been a recent hypothesis in the market that China is preparing to pull out of its zero-COVID policy that has led businesses and millions of Chinese citizens to curb infections. But a fitness official in China on Saturday reiterated the country’s commitment to politics, according to CNN.
“Practice has shown that our pandemic policy and prevention and a series of strategic measures are absolutely correct, and the most economical and effective,” Hu Xiang, a disease official, told a news conference when asked if China would adjust its COVID. short. -Term policies, CNN reported.