Apple Stock Price Plunges After Earnings Warning

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President Donald Trump has also raised new tensions between the USA and China by imposing tariffs on more than $200 billion in goods, although so far the iPhone hasn't been affected directly.

Both are not optimistic about emerging markets and see a slowdown. We have been flagging China demand issues since late September and Apple's guidance cut confirms our view. Apple had plenty of time to find another cash cow, and it didn't.

A NY law firm is garnering support for a shareholder lawsuit against Apple. Apple shares tumbled after Thursday's open.

Jain also thinks the announcement is due to Apple-specific problems, including lack of product innovation and differentiation versus Chinese rivals.

Cook said: "the trade tensions between the United States and China put additional pressure on their economy" which resulted in fewer customers.

"(That's) nearly three times as expensive as phones from other vendors that are filling the mass market".

When it comes to the Chinese market, where Huawei is the leading smartphone choice, Apple is now coming to terms with its decline.

Apple's revised Q1 guidance forecast is dropping by up to $9 billion in revenue compared to its original estimate. This in turn has caused shares to drop by more than 7 percent, essentially shaving off $55 billion from Apple's overall market value.

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As the tech sector fell 5.07 percent, the S&P 500 dropped 2.47 percent to 2,447.89.

Traders braced for another dose of the turbulence that ruled equities all December after reduced guidance at Apple Inc. sent US futures tumbling. Emerging markets, beyond China, are too small to move the needle for Apple, Jain says. The Russell 2000 index surged 41 points, or 3.1 per cent, to 1,372. And after several component makers in November forecast weaker-than-expected sales, some market watchers called the peak for iPhones in several key markets.

While a number of things can influence a user's decision to upgrade their smartphone, Cook cited Apple's "significantly reduced" iPhone battery replacements as one reason why some have chosen to stick with their current models.

"Apple makes its product in China".

Apple is now the highest-profile multinational corporation to warn that the economic slowdown in China could hurt its business. Automakers such as Ford Motor Co, Hyundai Motor Co and Nissan Motor Co Ltd all previously said they planned to cut production in the country.

"It's two-third what's happening in China and one-third Apple's pricing", said Gene Munster, managing partner at Loup Ventures, noting the weighted average iPhone price had jumped 23% with the release of the new models. The truth remains that the iPhone has always been Apple's core business and if Apple can't sell enough of them, the whole company struggles.

Bernstein Liebhard is banking on the fact that disgruntled investors may have appreciated more straight-up honesty a year ago. That growth came entirely from higher prices. Concern about the pace of growth in China, the impact of the USA tariff war and the general state of technology valuations all got an airing in the reaction to Apple's warning.

But some investors were heartened by Apple's plans on using its cash pile.

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