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Is Apple Stock Close to Losing Its Trillion-Dollar Value?


Sep. 4 2020, Updated 6:53 a.m. ET

Apple (NASDAQ:AAPL) stock has been freefalling since mid-February due to the growing coronavirus risk. On March 12, the stock fell by 9.88% and closed the trading day at $248.23. The downturn in the stock is the result of the economic fallout due to the coronavirus pandemic. On Thursday, the broader markets also plummeted, which left jittery investors in a panic. The Dow Jones Industrial Average fell by over 2,300 points or 9.99%. Notably, the Dow Jones hit the lowest level since June 2017. The S&P 500 and Nasdaq fell 9.5% and 9.4%, respectively, on Thursday.

At yesterday’s closing price, Apple stock was trading around 24.3% lower than its new 52-week high of $327.85. Also, the stock is trading about 45.8% higher than its 52-week low of $170.27.

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Apple’s market capitalization

As of Thursday, the market value of Apple stock was around $1.09 trillion. Apple is one of the most valuable companies in the world. However, the company’s market value has declined significantly from last month. As of February 12, Apple’s market cap was nearly $1.4 trillion. The value has also declined since the beginning of the year due to fears about the coronavirus. The company’s market capitalization was $1.29 trillion as of December 31, 2019.

Microsoft (NASDAQ:MSFT), another trillion-dollar value software company, has also lost significant value due to the coronavirus. Currently, Microsoft has a market value of $1.06 trillion. Amazon (NASDAQ:AMZN) and Google-parent Alphabet (NASDAQ:GOOGL) aren’t in the trillion-dollar club anymore. While Amazon has a market capitalization of $834.6 billion, Alphabet has a value of $765.1 billion as of Thursday.

I think that Apple might lose its market value soon due to the increasing coronavirus outbreak.

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Trillion-dollar market value is at risk

I expect Apple’s stock value to deplete. The company has significant exposure in China, which has become very risky due to the coronavirus outbreak. On Wednesday, the World Health Organization confirmed in a report that about 118,322 positive cases have been detected globally with the COVID-19 virus. Among the cases, 80,955 are in China alone. Globally, the pandemic has led to around 4,292 deaths—approximately 3,162 deaths were in China.

Store closures due to coronavirus

Due to growing fear among people in China, Apple closed around 42 of its stores in the country last month. However, the company reopened 38 of the stores last week. The other four stores will open today, as reported in Bloomberg. On Tuesday, Apple announced that it will close all of its 17 retail stores in Italy, according to a Bloomberg report. The death toll continues to rise in Italy due to the coronavirus. According to the WHO report, there have been around 10,149 confirmed cases in Italy and 631 deaths.

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Impact on Apple’s iPhone sales

The increasing number of coronavirus cases in China will likely hurt Apple’s iPhone sales. Imposing travel bans and restrictions on public places in China impacted iPhone sales in February. According to a Reuters report compiled by the China Academy of Information and Communications Technology, iPhone sales fell to fewer than 500,000 in China in February 2020.

An analyst from Bank of America expects that the coronavirus could postpone the launch of 5G iPhones, as reported by Livemint.

Revenue slowdown

Amid the coronavirus outbreak, Apple warned its investors last month that it might not meet its revenue guidance for the upcoming March-ending quarter. The company blamed the coronavirus for disrupting its iPhone supply and overall sales. In a news release, Apple said that its manufacturing partners in China would resume production at a slower-than-anticipated rate.

Analysts at Bank of America and Deutsche Bank also expect sluggish revenues in the upcoming quarter due to the coronavirus.

For the second quarter of fiscal 2020, Apple expected its revenues to grow by $63.0 billion to $67.0 billion. Now, analysts expect the company’s second-quarter revenues to grow by about 3.9% YoY to $60.3 billion. Meanwhile, Wall Street analysts expect the company’s fiscal 2020 sales to grow by 7.1% and fiscal 2021 sales to grow by 10.7% YoY. In comparison, Apple’s sales declined by 2.04% YoY in fiscal 2019.


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