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As Apple has taken a decision to temporarily close its stores in China due to the coronavirus, the sales of 1 million iPhone items could be delayed. However, it won’t significantly affect the company’s revenue.
The Coronavirus has slowed sales of Apple‘s iPhones. Reports indicate that the technology giant decided to shut down its stores in China. This comes as the coronavirus has spread all over China and entered several other countries. Analysts have speculated that this decision amid the coronavirus could lead to a sales slowdown of up to 1 million iPhones. However, this accounts for only around 3% of Apple’s total annual Chinese iPhone sales.
Analysts have speculated that this won’t affect the company’s bottom line. Limited transportation and a slowdown in foot traffic are considered to be major causes. These are already occurring in major cities across China. Analysts further expect this trend to continue in the next quarter. This is based on the closure of the stores until the end of February. It is expected that the impact on the loss of expected sales will be minimal.
Analysts based this assertion on the fact that there were no sales around the Chinese holidays. This, however, doesn’t reduce the risk of a major slowdown if the crisis continues.
Coronavirus Affects Apple’s Earnings and iPhone Sales
Apple had earlier decided to close down its stores in China until February 9th. The Cupertino California giant cited advice from health experts as the reason for this. Apple’s recent earnings have wowed everyone. The cautious guidance it gave at its recent earnings call is a cause for concern. Apple’s CEO Tim Cook attributed this to the current prevailing situation surrounding the coronavirus.
Its exposure to the Chinese market doesn’t help. Its dependence on China for most of its manufacturing is also a cause for concern as well. This has been a major source of concern for many investors. Besides the virus, geopolitical factors have also played a part in these concerns. The recent U.S.-China trade war is one such example. It also has increased the risk profile of the company as well.
Apple’s Earnings Grow Exponentially
This hasn’t bothered earnings as record sales show. Apple made a record-breaking $91.8 billion last quarter. An estimated $56 Billion in iPhone sales led the charge. This has also led to skepticism on the long-term viability of the stock. The reduction in revenue for its services is an indication of this. Many investors are concerned about Apple’s stock being overvalued and overheating at the same time. Others aren’t worried despite fierce competition in innovation from others.
The Coronavirus has sent businesses reeling from its emergence in China. Currently, there have been over 12,000 reported cases. Over 200 deaths have been recorded within the People’s Republic of China as well. Many countries including the United States have cited the coronavirus as a national health emergency. As the Chinese economy reels, it has become clear how intermingled the world has become.
Concerted efforts in tackling global crises are the way to progress for all of humanity. As at the time of writing this report, Apple’s (AAPL) shares stood at $309.51. This is a 4.43 decline since the last trading session.