U.S. stocks fell sharply on Thursday after yesterday’s surprise revenue forecast downgrade from Apple CEO Tim Cook.
A new report from Reuters explains that Apple’s share price fell by over 9 percent on Thursday after it cut its revenue forecasts for the first time in 16 years, blaming poor iPhone sales in China.
The sharp reaction puts Apple on track for its biggest one-day share price drop in five years and helped trigger a broader sell-off in US shares as investors fretted about the state of the Chinese market and the broader outlook for the global economy.
After Asian markets tumbled overnight and European exchanges stumbled, U.S. futures were trading lower on Thursday morning, dragged down by Apple’s stunning announcement Wednesday.
In an open letter to investors published last night, Apple cut its revenue forecast for the busy Christmas quarter by 7.8 percent. The tech giant is now anticipating revenue of $84 billion USD for the final three months of 2018, down five percent from the same period in 2017 and $9 billion lower than Apple’s original highest forecast for the quarter.
According to the Apple boss, “more than 100 percent” of its missed revenue could be attributed to a sales decline in China, as demand for its iPhone and iPad products weakened and fewer customers chose to upgrade their smartphones.
Cook placed the blame on “both macroeconomic and Apple-specific factors,” and said that the iPhone maker failed to “foresee the magnitude of the economic deceleration” in emerging markets.
Alphabet has now overtaken Apple as the world’s third-largest listed company after the precipitous fall in the latter’s shares. The 9% fall at the latest reading equates to $67 billion USD wiped off its market value. After breaking the trillion-dollar mark in 2018, the Cupertino company’s value now lies somewhere around $680 billion.