Barclays Plc analysts have downgraded Apple Inc., sending shockwaves through the tech giant’s stock, which experienced its most substantial one-day percentage drop since September, falling by 3.6% on Tuesday. The downgrade was prompted by Barclays’ expectations of soft demand for Apple’s latest iPhone models, particularly the lackluster performance of the iPhone 15 and concerns regarding the upcoming iPhone 16.

The market cap impact was palpable, with Apple shedding over $107 billion in market value as its shares reached a seven-week low, trading at $187.24, down 2.75% from the opening price of $187.15. The total market cap now stands at $2.91 trillion. This decline is estimated to erase approximately $90 billion from Apple’s market cap, highlighting the profound implications of Barclays’ downgrade.

Barclays analysts, led by Tim Long, downgraded Apple to “underweight” and reduced the price target to $160, emphasizing concerns about a potential reversion after a year with missed quarters and the stock’s significant outperformance. Long expressed skepticism about the iPhone’s future, citing a lack of compelling features or upgrades for the upcoming iPhone 16.

The challenges for Apple extend beyond the downgrade, with doubts emerging about its ability to sustain gains amidst increased competition, particularly from Huawei Technologies Co., and a Chinese government crackdown on foreign-made devices. Apple’s services business, which constitutes nearly a quarter of its total revenue, is also under scrutiny, with Barclays warning of potential risks.

Apple’s stock performance in 2024 reflects the broader challenges, with a 3% drop and concerns about sustained demand. The broader market sentiment, impacted by Apple’s decline, resulted in a 0.56% drag on the S&P 500 index on Tuesday.

As Apple navigates these challenges, the tech giant faces questions about its growth trajectory, ability to innovate in a competitive market, and the resilience of its services business in the face of regulatory scrutiny. Investors will be closely watching Apple’s strategic moves and product developments in the coming months to assess the company’s response to these headwinds.

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(via)

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