Apple slips again on China worries; issue is 'way overblown,' analysts say

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Apple (NASDAQ:AAPL) shares sank nearly 3% on Thursday, continuing Wednesday's decline on worries that the Chinese government has told its agencies to stop using iPhones. However, Wall Street seems to think the issue is "way overblown."

"On the recent China news over the last few days we believe in a worst case scenario any China government agency iPhone ban is way overblown as to quantify its less than ~500k iPhones of roughly 45 million we expect to be sold in China over the next 12 months," Wedbush Securities analyst Dan Ives wrote in a recent note.

In total, Apple (AAPL) lost nearly $200B in market cap over the two-day stretch.

Ives, who has an outperform rating and $230 price target on Apple, added that the tech giant has seen "massive" share gains in the Chinese smartphone market, to the tune of roughly 300 basis points over the past 18 months. And with the iPhone 15 right around the corner, the tech giant has "incremental momentum" to gain more share, Ives added.

Regarding the next version of the iPhone, which is slated to be unveiled on September 12, Ives said he is expecting some "noteworthy technology enhancements" related to design, as well as a $100 price increase on the iPhone 15 Pro and Pro Max.

"We believe now is the time to increase iPhone prices modestly as while Apple will keep the base model prices unchanged the enhanced technology, chips, and battery technology in iPhone 15 Pro/Max warrants this strategic pricing move from Apple," Ives explained.

Ives also pointed out that China is "key" to the success of the iPhone 15, given that the Pro and Pro Max models have become more popular than the baseline models. He is expecting a roughly 75% to 25% split, up from historical splits of 60% to 40%.

Citi analyst Amit Daryanani said the fallout is more about "headline issues" as opposed to "something that will have a material impact," adding that government officials have probably already avoided the use of Apple products.

Separately on Thursday, Bloomberg reported that the ban could be expanded to state-run companies and other government-controlled organizations.

The news outlet added that if a block comes to fruition, it's unclear how many companies or agencies could adopt the restrictions on personal devices, given that there is no formal or written injunction just yet.

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Comments

[Bill West]

Nobody in the space is talking about this feature on the iPhone 15 PRO line phones.

The recording of spatial videos for the VisionPro headset is a total game changer.

This will be TECTONIC in the smartphone video world. Vacation pics, instagram, tiktok, whatever....this will change the world....

Wait for it..!!

[combatcorpsmanVN]

1.5 Billion people in China -- How many work for the Government? The rest are AAPL consumers. And, that's if the Govt workers completely fall in line with government dogma.

AAPL is still going to sell a few phones in China.

[typecheck]

@combatcorpsmanVN how many Huawei phones are sold in USA? It will be just as many iPhones sold in China soon.

[dstb]

The China thing is nothing. The real issue is the EU trying to change Apple’s business model and weaken its brand and security. Since there is substantial smartphone and AppStore competition it is all absurd. App developers are not starving as they’d have you believe. But in the end this is still an overvalued stock.

[Doug-]

@dstb When a business is high quality it is not overvalued when compared to mediocre businesses.

[dstb]

@Doug-
It depends. Valuation is largely separate from business quality. A great business can produce mediocre returns if one gets in at the wrong time.

[Hertzee]

Whats good for the goose (USA) is good for the gander (China). AAPL is still an amazing company. I am staying long!

[ex institutional listed derivatives analyst]

I would not be surprised if large institutions are selling with Warren Buffet leading the way.

[Blowback2]

@ex institutional listed derivatives analyst Doubt if Warren sells….

[HardCovenant]

AAPL great franchise, Steve was my neighbor, collaborator and friend, tv talking heads say we aren't supposed to touch AAPL position, nah, when some SA person in August compared Apple to IBM which was bizarre I said:

"yeah it’s really off to compare IBM which had to overpay for RedHat to have any cloud presence to Apple,
albeit I commented here I was out at $195 a month ago and got the usual blowback…"

not exactly sure where to get back in but it's approaching, Apple finally taking AGI seriously

[DigitalRobberBarons]

I pay $150 every 3 years for a new smart phone. People who have to buy the latest most expensive iphone every year are probably the same people about to get their credit cards taken away. BOOM!

[GameBuzz]

@DigitalRobberBarons I paid $150 for my new iPhone five years ago, and $399 for my upgraded one last month.

[All*AAPL]

@DigitalRobberBarons: " People who have to buy the latest most expensive iphone every year are probably the same people about to get their credit cards taken away. BOOM!"

**My wife and I upgrad our iPhones every year and buy them directly from Apple. Our credit card company, Chase, just notified both of us that they have increased each of our credit limits almost $10,000. BOOM!"

[DigitalRobberBarons]

AAPL needs to get repriced to $100. Can't happen sooner.

[All*AAPL]

@DigitalRobberBarons: "AAPL needs to get repriced to $100."

**Make that *YOU* need for AAPL to get repriced to $100. Not going to happen.

[Philippe0991]

Healthy for QQQ and SPY. AAPL weights way too much in indices + This old company does not worth that much at all.

[hav]

The Wall Street Journal is owned by Rupert Murdock, I would consider the source.

[ptcsys]

Huawei plan to ship 60 million mate 60 phones next year

[hahaha48]

It is the huawai new mate 60 that is better than the new iPhone 15 in every way including satellite communications and low temperature photos taking and every specicification

[sepucajoe]

@hahaha48
satellite communications with no visible antenna, must not be very useful

[typecheck]

@sepucajoe Really? This is life saving feature. How good a quality do you need when you just want to call rescue with your coordinates.

[sepucajoe]

@typecheck
I just found out it's not voice satellite, it's just text messaging (like iphone) - that's why no large visible antenna needed (low bandwidth)

[Taylor Huddlestun]

75/25% split.... wow.... They really expect the already poor consumer to spend another $100 on the already expensive and exact same phone they have used for the past 3-5 years. 🤦

[Institutional Working No More]

Decoupling is fair both ways….

China phone still use Android…boost to Google…and more security risks than Xi understands vs iOS.

[Sunshine2030]

@Institutional Working No More
Americans has no knowledge what is going around world, do they? Harmony 4.0 OS on new mate series, Own AI integrated Pagu, own BDS satellite connection for calls. US single band satellite to apple allows only text for now.

[r Negoro]

If apple has a problem, Tesla also has a huge problem. A lot of companies sell to China, and I think a security ban doesn't mean a lot.

[combatcorpsmanVN]

I've read that 18% of AAPL's business is generated in China. That's a lot of Revenue. So, the burden is now on AAPL to respond to China's expanding domestic phones to push AAPL's phone out of State entities. Great Shock value initially but not smart move by China in my view. AAPL will have to create facilities away from China or enhance existing facilities already in operation to increase the of manufacture AAPL products. So, the dye is cast -- China says: to one degree or another: "AAPL no longer welcome." So, Foxcomm, AAPL and economics require movement to other venues.

China apparently is willing to punish the US in general and AAPL in particular despite the millions of Chinese employed by AAPL. Politics matters; Economics secondary - Temporary problem overall with temporary inconvenience for AAPL but a Giant negative message to US firms manufacturing in China -- that message is that China isn't trust worthy and is willing to harm innocent companies in order to ram its politics dogma down the US throat. And, the Chinese people will still be buying AAPL products -- it's just the way humans react to governmental strangulation all over the World.

Not a smart Macro Econ move, Imo.

[typecheck]

@combatcorpsmanVN It is retaliation. Of course it is not going to be pleasant. What do you expect China to do when USA keeps throwing punches. Eventually China will punch back.

[6228371]

@combatcorpsmanVN

I guess the Chinese government figures that the factories making Apple products in China could make phones for the Chinese brands whose phones will replace Apple phones in China. It is Apple's fault for becoming so dependant on China for their manufacturing.

[DwightK]

@combatcorpsmanVN

I'm still laughing at that former president/criminal when he promoted "trade wars are easy to win" mentality. Rates right up there with "Mexico is going to pay for the wall" :) How gullible some can be.

[omttepescott]

Nice pro mask mandate hysteria thumbnail! Way overblown like APPL.
HERE WE GO FOLKS, lockdowns right about election time.
SA got the memo!

[Steve971]

@omttepescott geez...get a grip

[omttepescott]

@Steve971
What, you don't appreciate the levity? You don't find posting masked people entertaining?

[Outcast_Searcher]

Given that the fear is that China really wants to protect their own phone makers and/or retaliate for US sanctions on China tech or preventing Chinese access to tech -- the POTENTIAL issue is ALL of China's demand for Apple phones -- or even all Apple products.

To just confidently assert a small pullback in Apple stock on the risk is "way overblown" seems just plain wrong. It MAY be overblown -- but we don't know the future and can't be certain of China's motives (vs current claims re intent).

[Obfuscated Clarity]

I personally hope China bans the iPhone outright across the entire country. I also hope they ban Boeing, Coke, Nike and any other American brand doing business over there. I then hope American companies wake up and stop selling out to the CCP for the sake of the never ending chase of the next dime. The CCP will only fall further and further behind once they no longer have American companies readily handing over their technology. Sure, they'll continue to steal IP from within the US, just like France and Israel and most of our other 'allies', but at least make it a challenge for heaven's sake.

[PanicFirst]

@Obfuscated Clarity China probably has the smarts to do a lot of this stuff but they lack the ingenuity/entrepreneurship. It's why the hivemind doesn't work. For some reason the U.S. is trying their damnedest to turn into it though...

[cash]

@PanicFirst Mr. Xi prefers his people to study his thoughts.

That may take a few seconds but nothing else is allowed on the pain of severe punishment.

All these communist countries like China will end up like North Korea oppressing their people, threatening their neighbors and just being a curse on globe in general

[typecheck]

@cash You must be talking about USA. How many countries has N Korea invaded in the past 50 years? 0. How many countries have USA invaded?

[QElonKingTwit]

Would AAPL make a big acquisition here to take some of the pressure off iPhone sales? There was a recent story/rumor of AAPL buying Disney. That's a really big fish and does AAPL want those headaches?

Maybe they buy Lucid and become an immediate player in the EV game. With their money they could expand and ramp quickly.

[Capital Gains]

@QElonKingTwit I think they should acquire a company in the Tech( chips) or automation space going forward, Buying Disney would be a waste of time and money. Apple, Microsoft, Google and Amazon, should start making their own chips and hardware.

[SqueakyToy]

There's no future in which Apple wastes one red cent on Lucid.

[Outcast_Searcher]

@QElonKingTwit: If there is a huge issue with the Iphone re what demand China decides to allow in China, distractions like that don't change the fundamental problem.