Projected iPhone 5 Slowdown Impacts Apple Stock

The year seems to be ending on a dour note for Apple. The tech giant recently failed to get some Samsung devices banned in the US as the judge passed the decision in the Korean firm’s favor. This time round, Apple’s stock has entered a downward spiral. It has been a successful year for Apple but the stability and strength of previous years is missing. The foremost evidence of this is that Apple’s stocks have plummeted below $500 for the first time in over 10 months.

Citigroup Reduces Apple’s Stock Rating

The news broke out when Citigroup went ahead with reducing Apple’s stock rating. For a company with a market capitalization worth hundreds of billions, a falling stock price is major news. Facebook stock is a recent example of this. The stock price kept falling and Mark Zuckerberg’s net worth went down a few billions. The stock price went down to $499 before it gathered some momentum and hit $518.83 by the close of the day’s trading on Monday.

From the outside, it doesn’t seem as though Apple should panic just now. After all, their stock managed to rally and increase by almost 2% during the course of a day. It shows that their stock is not as volatile as most companies in the stock market and can resist any drastic peaks and valleys. Yet, putting it into perspective, Apple had crossed the $700 close to mid-September. This means the stock price has gone down by almost $200 within three months.

Projected iPhone 5 Slowdown

The company faces stiff competition in the Asian markets as compared to the West. Apple has strong sales in the US and UK but in China and Japan, suppliers have reported that they would have to reduce the orders they placed. One should not forget that the iPhone 5 is not an old device. It was launched only a few months back. If the demand for it has reached saturation point already, Apple could have a tough holiday season, especially in Asia.

Citigroup acted on the news and brought the company’s rating down from buy to neutral. The bank also lowered the price target for the stock, bringing it down $100 from $675 to $575. According to their projections, Apple’s stock is going to fall again and would not recover till next year. The competition posed by phone makers like Nokia and Samsung in the Asian markets is proving to be too hot to handle for Apple.

Slowdown despite Record Sales

A recent report had emerged regarding iPhone 5’s sales in China which suggested that it was the smartphone of choice there. According to reports, over 2 million units of the smartphone were sold in China in the first three days of release. Well, that trend has surely been reversed given the information coming in from the market. In addition to Citigroup, UBS and a couple of other banks have also revised Apple’s stock rating and decreased the target price for the near future at least.

[Image via twylah]