Apple began 2023 with a market capitalization that has dropped below $2 trillion, a drastic change from the previous year when it reached $3 trillion.
Following early morning trading on Tuesday, Apple’s market capitalization fell from above $2 trillion to below $2 trillion. Apple’s stock price fell by more than 3.5% on Tuesday, bringing it to its lowest level since June 2021.
Apple was the first and only company to surpass $3 trillion in market capitalization on January 3, 2022, exactly one year ago. The drop to below $2 trillion represents a massive change in Apple’s fortunes. According to the Financial Times, despite losing 27% of its value in the past year, Apple is still performing better than its competitors, as the Nasdaq Composite lost 33%.
The decline, which may be temporary, is attributed to investor jitters after months of supply chain issues affected some of the company’s most popular and profitable products. Issues at the Zhengzhou factory in China have resulted in massive delays in the shipment of the iPhone 14 Pro and iPhone 14 Pro Max during a typically high sales period.
As the problems became apparent, analysts repeatedly predicted that shipments would decrease by millions of units, and consequently lowered their projections. Analysts now anticipate an 8% year-over-year decrease in quarterly net income.
China’s loosening of notoriously strict COVID restrictions, which led to an increase in lockdowns and infections, contributed to the problems. On Tuesday, it was reported that Apple had canceled orders for the majority of its products with Chinese component suppliers.
Tom Forte, an analyst at DA Davidson & Co., believes that the current state of COVID-19 in China will have the greatest impact on Apple’s operating results in 2023.
Despite the decline, Apple remains the most valuable tech company, followed by Microsoft with a market capitalization of $1.8 trillion.