On January 2 after the market closed, Apple (AAPL) informed investors about a downward revision in its first-quarter guidance. The company revised its first quarter of fiscal 2019 (which ended on December 29) revenue guidance to approximately $84 billion, compared to $89 billion–$93 billion guidance provided earlier. The company also slightly lowered its first-quarter gross margins guidance to about 38%, versus the previous given range of 38%–38.5%. This update triggered a sharp sell-off in Apple stock yesterday as it settled with 10.0% losses on Thursday.
Jim Cramer on Apple stock
On December 3, CNBC’s Jim Cramer said in a tweet, “You can’t rally on a day when Apple’s down and headed to $120 –10x $12…” Apple stock lost about 10.0% on Wednesday, versus 2.5%, 3.0%, and 2.8% drops in the S&P 500 Index, the NASDAQ Composite Index (QQQ)(VTI), and the Dow Jones, respectively. Other large US companies Amazon (AMZN), Alphabet (GOOG), General Motors (GM), NVIDIA (NVDA), Facebook (FB), Intel (INTC), and Microsoft (MSFT) lost 2.5%, 2.8%, 4.1%, 6.0%, 2.9%, 5.5%, and 3.7%, respectively, yesterday.
According to Cramer, “Apple, under severe pressure after cutting revenue guidance, could eventually bottom out at $120 per share,” CNBC reported. However, the report also added that Cramer “likes the stock over the long term” and “warned investors against selling Apple’s stock.”
Apple’s recent cut in guidance came after many Wall Street analysts had already cut their estimates for the company, citing sales weakness in China. Apple’s admission of Chinese market trouble made many investors sell the stock in a panic on Thursday. News of positive progress in US–China trade relations and a sharp recovery in Chinese economic data could boost Apple investors’ confidence in the near term.