Apple shareholders don’t take kindly to anything less than higher earnings in all product categories, and sadly this quarter the Apple Watch and iPhone didn’t live up to the already massive expectations.
Shares dropped to $114.60 (£73.32), down 14 per cent since February. In a single day, the share price dropped 4.4 per cent, indicating the shareholders are concerned with Apple’s future growth and the Apple Watch sales.
The 14 per cent share price drop has removed $96 billion (£61.6 billion) from the value. The market value is now $697 billion (£445 billion), a lot lower than activist investor Carl Icahn’s $1.4 billion prediction.
Xiaomi is back at the top spot in the Chinese market, with Apple dropping down to third behind Huawei. That is a worry for shareholders, since Apple’s product sales are top heavy and rely on iPhone sales.
China is Apple’s biggest market, having them in third is not good enough. As the US market continues to stagnate, countries like China and India are where Apple will find new customers.
The Apple Watch is also under scrutiny, after Apple failed to reveal sales for the smartwatch. Analysts have pegged anywhere between 3.5 and 7.2 million sales in the opening quarter. Sales of the Apple Watch have apparently plateaued since launch, selling under 10,000 units in a week since the first month.
On top of that, the iPad continues to decline in sales. The only market showing a real sign of growth is Mac, but that accounts for so little of Apple’s overall revenue it is not taken into account by shareholders.
Apple is still in great shape with $150 billion (£95 billion) in spending money if it ever needs to acquire a company. It also makes billions in profit every year to add to that massive cash pile.
The worry is the lack of product sales in categories other than the iPhone means that when the iPhone isn’t performing, the company isn’t. Apple’s lack of revenue in services makes it hard for shareholders to see major growth in the future, unless Apple launches an entirely new product, like a car.