Apple Inc. (AAPL) Tumbles after Predicting First Sales Decline


The shares Apple Inc. (NASDAQ:AAPL) declined to as much as 6% today as investors were disappointed with its sales forecast of around $50 billion to $53 billion. It was the first time for the company to predict a revenue decline in 13 years.

The company’s stock is trading around $94.86 per share, down by more than 5% at the time of this writing around 2:18 in the afternoon in New York. The stock price of Apple declined as low as $94.04 per share earlier today, wiping out more than $20 billion of its stock value.

Aside from its weak second quarter sales forecast, investors were unhappy with its lower-than-expected revenue and iPhone sales for the first quarter. Apple reported $75.9 billion in revenue and sold 74.5 million iPhones. Wall Street analysts expected $76.5 billion in revenue and 75 million units sold for the quarter.

Analysts cut price target on Apple

Several analysts covering Apple shares cut their price target. Data from Reuters showed that the most bearish firm was FBN Securities as it lowered its price target by $30 to $120 per share.

FBR & Co. reduced its price target to $130 from $150 per share. The firm’s analyst, Daniel Ives commented, “Cook & Co have a few tough quarters ahead until we get to the buildup around iPhone 7 later this year, which is what bulls are focused on to turn this ship back into growth waters.”

On the other hand, CreditSights downgraded its rating on Apple’s bonds to Underperform from Market Perform based on the perception that the company’s spread curve is too flat compared with its peers in the industry.

“Apple still has a rock solid balance sheet, the largest market cap in the world, and extremely popular products. However, 2/3 of its revenue and a larger portion of profits are from iPhone. We believe Apple’s spread curve is too flat relative to its peers, and we feel safer in MSFT and AMZN bonds as long-term holds,” the firm stated,” according to CreditSights.

Apple stock decline: a buying opportunity

Meanwhile, analysts at Goldman Sachs suggested that the decline in the stock price of Apple offers a buying opportunity for long-term investors.

In a note to investors, the firm’s analysts wrote, “We are looking for March to mark the trough in year-on-year iPhone unit growth, which should provide an attractive entry point into the stock.”

Over the past year, Apple’s stock price was down more than 12%.

Apple Stock Chart January 27