Apple’s stock was down by as much as almost 4% Tuesday morning from Monday’s close on investor concern that the company has seen peak iPhone sales. In response, Apple is shifting marketing resources and providing unusually generous promotions to boost sales.
What set off this drop was an announcement Monday from semiconductor company Cirrus Logic, an Apple supplier, that it expected third quarter profits to go down $60 million from its previous guidance range. The cause was “recent weaknesses in the smartphone market.”
Worries that Apple’s iconic product, which drives most of the company’s profits, has finally peaked have rattled not only investors in the company, but its Asian suppliers.
Goldman Sachs cut its target price for Apple shares twice in November, as Business Insider reported. Goldman’s analysts thought that Apple might have “miscalculated on the price/feature balance” for the new iPhone XR.
Apple also said it would stop reporting unit sales of iPhones, which added to market uncertainty and analyst concern.
But now the company looks as though it is trying to address weakening demand by using discount promotions and shifting marketing staff from other projects, according to Bloomberg.
The discounts come through aggressive buyback terms for older iPhones. A source described the activities as a “fire drill” and a potentially tacit admission that sales have been falling. They include an iPhone XR price of $449, $300 less than the retail price, with the trade-in of an iPhone 7.
Apple has lost 20% of its market value since early October.
