Fall history for Apple! The valuation falls below $2 trillion

Exactly one year after surpassing the $3 trillion mark, Apple fell below the symbolic $2 trillion mark during Wall Street trading hours. This phenomenon has affected other US technology stocks.

Apple was greatly affected by the economic slowdown

The economic recession that marked the year 2022 did not escape any company.

Currently, a third of the assessment is lost within a year. Apple fell 3.7% on Wall Street on Tuesday, dropping its value below $2 trillion. The decline really began after the Apple brand released a report saying it expects demand for its products to decline in 2023.

A year ago, on January 3, 2022, Apple briefly surpassed $3 trillion, a company-only record so far.

Although American Microsoft and oil company Saudi Aramco are the last companies in the world with a market capitalization of more than $2 trillion after leaving the very closed club in recent months, no company in the world can now exceed this valuation.

Warren Buffett’s beloved tech conglomerate and investment firm Berkshire, which has a large stake, has been troubling markets in recent months, not least because of the situation in China and declining demand for its iPhone product.

2022 was not kind to the Cupertino company, which had to face many problems. China’s recently repealed Zero Covid policy has had a long-term impact on Apple’s supply chain.

The shutdown of the Foxconn factory, the world’s largest iPhone assembly plant, caused Chinese workers to leave the country, sparking unrest. This situation has caused a slowdown in smartphone production. As a result, Apple was forced to reduce the supply of iPhones by 20%.

Against this fragile backdrop, Tuesday’s report unnerved investors and sent Apple shares lower. The Apple brand became the second company after Amazon whose market value fell by $1 trillion.

A good entry point for investors?

The Cupertino company recorded its highest monthly market share in China in October 2022, even as its shares fell, according to Asia-based global industry analyst firm CounterPoint.

As for brokers, opinions differ. Exane BNP Paribas changed its rating from “outperform” to “neutral”, citing that the outlook for the year hardly justified the valuation premium.

The brokerage’s team now estimates iPhone shipments at 224 million, down from a previous estimate of 245 million, citing production difficulties at Foxconn’s Chinese factory and a weaker outlook for consumer spending.

The target price is set at $140. So Exane BNP Paribas doesn’t see any major positive catalysts and the stock is overvalued.

Other specialists are more aggressive after cleaning. That’s according to Wedbush analyst Dan Ives, who maintained a positive “outperform” recommendation on the Cupertino, California-based group’s value, slightly adjusting the price to $175 from $200.

According to him, Apple has done much better than the rest of the technology sector in the last year. “But despite concerns about demand, the company remains our preferred tech name,” Ives noted for the day.

Amazon and Apple in history

Today, Apple joined the ranks of Amazon, the first company to lose $1 trillion, dropping its market value from $1.9 trillion to $879 billion in July 2021.

However, the e-commerce giant has worked hard throughout 2022 to take measures to curb this loss of momentum. It wasn’t enough though, as the Amazon title continues to fall.

Considering this situation, the American company started to reduce the workforce in November 2022 and will continue until 2023.

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