At the beginning of 2024, Apple's stock price experienced four consecutive declines.
On January 4, 2024 local time, it was reported that Harsh Kumar, Chief Analyst of Piper Sandler, downgraded Apple's rating from "overweight" to "neutral", marking the second recent downgrade of Apple's rating.
Previously, investment bank Barclays downgraded Apple's stock rating from "neutral" to "underweight" and lowered its target price for the next 12 months to $160 per share. Prior to this, few securities firms had given Apple's stock a bearish rating.
As of January 5, 2024 local time, the closing price of Apple was $181.18 per share, which also reduced Apple's market value by billions of dollars.
A reporter from China Business Daily noticed that securities firms have attributed the downgrade of Apple's stock rating to the demand in the iPhone market, especially the demand pressure on iPhones in the Chinese market.
Barclays Bank stated that the weak sales of iPhone 15 may be a warning signal for a decline in sales of Apple's next-generation iPhone 16 and a broader decline in hardware sales.
Meanwhile, Harsh Kumar expressed concerns about iPhone inventory in his report, citing concerns that iPhone inventory levels and sales growth rates may peak. And Harsh Kumar has been bullish towards Apple since March 2020, until this adjustment. "We are concerned about Apple's mobile phone inventory entering the first half of 2024, and we also believe that the sales growth rate has reached its peak. Changes in China's macro environment may also bring pressure to the mobile phone business."
Based on the above factors, Harsh Kumar predicts that Apple's performance will face challenges. He also emphasized the impact of high interest rates on Apple's overall performance.
Barclays analyst Tim Long wrote in a report to clients that the current "sluggish" sales performance of iPhone 15, especially in China, indicates that the sales performance of iPhone 16 will also be weak.
The reporter noticed that only three months after the launch of the iPhone 15 series, major e-commerce platforms in China have already offered significant discounts. In recent days, the 128GB version of the iPhone 15 on Apple's self operated flagship store on JD.com is priced at only 5199 yuan, and there is also a discount of 800 yuan for those over 3000 yuan. Through slowly buying the app, it was found that the model is priced at 5199 yuan, which is only 51 yuan more expensive than the lowest price of 5148 yuan during the 2023 Double 11 period.
The iPhone 15 Pro Max model also saw a significant price reduction. The Pinduoduo 10 billion subsidy page shows that the current price of the 256GB iPhone 15 Pro Max in blue titanium metal color is only 8298 yuan, which is a direct decrease of 1701 yuan compared to the original price of 9999 yuan on the official website.
IDC China Senior Analyst Guo Tianxiang analyzed to reporters that currently, the demand for iPhone 15 in the Chinese market is indeed average, with insufficient product upgrades and declining attractiveness. Recently, e-commerce platforms have been receiving subsidies, and now channel delivery prices have also decreased, marking the first time in history that prices have been adjusted so early.
Guo Tianxiang told reporters, "2023 is after the Spring Festival, and even earlier, prices will have to wait until the 'June 18th' period, or even after the third quarter."
"Although there may be some challenges in the Chinese market, Apple can at least maintain relatively stable performance in the global market." Lin Keyu, senior analyst at Counterpoint, told reporters that when evaluating the performance of the iPhone 15 in the Chinese market, although the current market growth is slowing down and the overall performance may not be as good as the previous generation, it still maintains a leading position in the fourth quarter of 2023. Looking ahead to 2024, with the continuous growth and investment of Chinese brands, the market share of high-end Chinese mobile phones may continue to increase, which may have some constraints on Apple's growth in the domestic market. However, from a global perspective, Apple still has growth potential in emerging markets such as India, Latin America, and Southeast Asia, which have shown strong interest in Apple products. At the same time, the company's investment in these markets is gradually increasing.
Tim Lang wrote, "iPhone sales and product portfolio remain weak, and Mac, iPad, and wearable devices also lack signs of rebound."
In December 2023, due to patent disputes, Apple temporarily suspended sales of two high-end series of smartwatches, the Apple Watch Series 9 and the Apple Watch Ultra 2, in the United States. However, the two watches temporarily resumed sales until Apple filed an appeal and the court made a final ruling.
In fact, the personal computer (PC) market sales, including Mac, are expected to be optimistic by institutions in 2024.
Canalys predicts that global PC shipments are expected to recover after seven consecutive quarters of decline. Looking ahead, the global shipment of personal computers is expected to reach 267 million units in 2024, an increase of 8% compared to 2023. Canalys China analyst Xu Ying told reporters that by 2024, the total global shipment of personal computers with AI functionality will gain about 19% of the market share (including all M-series Mac products and expected new products in the Windows ecosystem), and AI personal computers will experience rapid development and popularization.
Furthermore, it is worth noting that Tim Lang expects Apple's service business to experience a slowdown in growth, partly due to regulatory scrutiny. Tim Lang said, "We expect Apple's services business to grow by about 10% and 8% in fiscal years 2024 and 2025, respectively, far below the previous growth expectation of about 20%."
Apple's service business includes App Store, iCloud, Apple Music, AppleTV+, Apple Pay, Apple News, Apple Arcade, etc., with a gross profit margin of about twice that of its product business. In recent years, Apple has placed great emphasis on its services business and successfully developed it into a second growth curve. In the fourth quarter of the 2023 fiscal year, Apple's service business accounted for nearly 25% of its total revenue, reaching a new high and being the second largest business after iPhone sales.
In terms of Apple's service business, antitrust regulations in the European Union, the United States, and Japan directly threaten the "Apple tax". When Google faced an antitrust trial in the United States, it was implicated in the fact that it pays high fees to Apple every year to become the default search engine for Apple devices, which may threaten Apple's annual licensing fees of over $10 billion.