Apple shares are falling and investors are selling the stock of the world’s most famous technology company. Apple’s 52-week low price of $125.87 signifies a significant sell signal for technical analysts who use charts to predict future stock trends. According to numerous chartists, a downtrend consists of three lower highs and three lower lows. Apple’s stock reached a 52-week low on Wednesday, establishing this pattern for 2022.
Early in January, Apple’s stock price reached a 52-week high of $182.94. The stock dropped to $150 in the middle of March before falling just short of the January high at the end of the month. In May, the stock surpassed the previous low of $150, falling to $130 in June. In August, the stock reached a high of $173 due to a rebound, which was significantly lower than the previous high. With three lower peaks, a decline below $130 would indicate that the stock is in a downtrend. Today’s decline of $3.99 to $126.04 represents a new 52-week low.
Apple’s stock has experienced a sequence of lower highs and lower lows.
What have investors in Apple worried about? Due to the COVID outbreak in China, Apple’s primary contract manufacturer Foxconn has been forced to drastically reduce the production of the iPhone 14 Pro and iPhone 14 Pro Max. As the two most expensive iPhone models, Apple’s revenue is bound to take a hit, and the company even issued a warning last month to investors and customers. “We now anticipate lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we had previously anticipated, and customers will experience longer wait times,” the company said.
Despite its large 6.7-inch display and exceptional battery life, the iPhone 14 Plus has been a failure. The phone demand is weaker than anticipated. According to market researcher TrendForce (via 9to5Mac), the Foxconn factory in China that produces the most iPhones (the Zhengzhou facility) has been unable to increase its capacity utilization rate above 70% since October. Foxconn turned to its Shenzhen City plant to make up for lost production, but the Shenzhen City plant cannot make up for the shortfall.
TrendForce has reduced its forecast for iPhone 14 production in 2022 to 78,1 million units. In addition, the report indicates that the labor shortage issues in China that are affecting Apple this year could worsen in the first quarter of 2023. Due to this and other factors, TrendForce predicts a 22% year-over-year decline in iPhone production to 47 million units for the first calendar quarter. According to the research firm, Apple is exerting significant effort to shift as much production as possible from China to India and Vietnam.
Apple will reportedly divert some orders for the iPhone 15 Ultra from Foxconn.
While this does not move any iPhone production out of China, Apple is reportedly shifting some orders for the iPhone 15 Ultra from Foxconn to Luxshare, possibly to punish Foxconn for the staffing issues it has experienced this year. Luxshare has a factory in Vietnam that produces some Apple products, but it is not equipped to assemble the iPhone. Therefore, even if this becomes a reality, Apple will have to rely on Luxshare’s factory in China to assemble its most expensive phone.
Foxconn has produced every iPhone Pro model over the past few years, but the decline in Apple’s stock over the past few months can be attributed to the difficulties Foxconn has had maintaining fully staffed assembly lines. The violent protests between Foxconn employees and security may also be a factor when Apple decides whether to cancel orders for the iPhone 15 Ultra from its most important contract manufacturer.
As per TrendForce, “Apple plans to double its device production capacity in India by 2023, and factories in Vietnam will begin contributing by midyear. In light of the escalating trade dispute between China and the United States, Apple will be compelled to rely solely on production sites outside of China to meet the North American market’s sales demand.”
The research company notes, “TrendForce believes that at least 30–35% of Apple’s entire device production capacity will need to be located in Vietnam and India for this to occur. Therefore, Apple will need to continue to increase the proportion of its device production based in these two nations over the next several years.”
All of this contributes to a depressing environment, prompting Apple shareholders to sell their shares. Apple’s stock has decreased by $53.34, or nearly 30%, over the past year. Over this year, Apple’s market value has plummeted by close to one trillion dollars, a staggering decline.