Apple (AAPL) Stock Could Take a Hit after Company Admits Coronavirus Will Impact Profit

UTC by Tolu Ajiboye · 3 min read
Apple (AAPL) Stock Could Take a Hit after Company Admits Coronavirus Will Impact Profit
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Apple (AAPL) stock could suffer as Apple has said that its profit will not meet the target this quarter because of problems caused by the coronavirus.

The coronavirus epidemic is still biting very hard with far from desirable effects. Since the outbreak last year, the negative outcomes tied to the epidemic have consistently risen. Financial markets have suffered because of the number of businesses that have been and are still being affected by the spread. More worrisome now is the fact that Apple, one of the highest valued firms in the world, has cited the coronavirus as a problem that could affect its revenue and stock.

Apple Admits Coronavirus Problem

In an official statement yesterday, Apple said that it will falter on its predicted revenue and profit for the quarter because of the coronavirus. In response to the news, stock market futures took a hit and crashed. The NASDAQ composite was the biggest fall at 0.9%. The S&P 500 futures, as well as the Dow Jones Industrial Average (DIJA), also crashed by 0.4% respectively. The statement said:

“We are experiencing a slower return to normal conditions than we had anticipated. As a result, we do not expect to meet the revenue guidance we provided for the March quarter due to two main factors.”

The mere fact that Apple has admitted that the coronavirus is a problem shows just how biting the outbreak is and how serious it could still be. It also paints a better picture of the conditions smaller businesses are facing. If a multinational tech giant like Apple is running into related problems, it can only be worse for smaller companies.

Apple Highlights Specific Coronavirus Problems

According to Apple, there are two major reasons why the virus is a problem.

Firstly Apple says that iPhone supply is “temporarily constrained” because of manufacturing. Apple also admits that its manufacturing partners are not within the Hubei province where the coronavirus originated and that they have all reopened. However, it stresses that “they are ramping up more slowly than we had anticipated” because health issues are paramount.

The second reason is basically a demand problem in China. Because there is still a lockdown in most parts of the country, Apple stores have been shut. The statement also says that the partner stores have also closed and so sales have not been forthcoming.

A few stores are open. However, those ones see little to no customers and don’t even operate the normal hours they would have if there was no outbreak. Apple says demand outside if China is still strong.

Coronavirus and Stocks

Apple (AAPL) stock has had an interesting run for a while now. Currently, at $314, Apple has climbed over 90% in the last year and over 10% this year alone. However, the coronavirus could easily disrupt the streak. If the outbreak continues for much longer, things are probably going to get much worse.

Last week, Tesla indirectly admitted in an SEC filing that the coronavirus is a problem. The electric vehicle maker described “health epidemics” as one of the serious risk factors that will negatively affect the companies business and financial results.

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Tolu Ajiboye
Author: Tolu Ajiboye

Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.

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