Apple's Stock Plummets, Last Remaining Company in $2 Trillion Club Drops Out

Apple Inc. shares have been steadily sliding, pushing the iPhone maker's market value below $2 trillion. This is the latest casualty in the tech stock rout.

Apple's stock fell by 4.2% on Tuesday amid concerns about iPhone supply in the crucial holiday quarter. This has caused investors to lose faith in the company's ability to weather higher interest rates. As a result, Apple's market value has dropped to $1.98 trillion. This ends its reign as the last company to sport a $2 trillion valuation, after Microsoft and Saudi Aramco both retreated in 2022.

This milestone marks a significant decline for Apple. The company's stock had been performing well compared to the S&P 500 Index over the past year, but it has taken a hit in recent weeks due to concerns that production problems with the iPhone in China will hurt holiday sales. This is a crucial time of year for Apple, so any setback could be significant.

Apple's shares briefly rallied to climb above $3 trillion in market value a year ago, as the S&P 500 hit a record high.

The four largest US technology companies have lost a combined $3 trillion in market value so far in 2022 amid soaring inflation and slowing sales growth. December was Apple's worst month since May 2019, with a decline of 12%. That exceeds the 9% decline for the tech-heavy Nasdaq 100 Stock Index in the same period.

Apple, based in Cupertino, California, has been affected by supply disruptions stemming from Covid-19 lockdowns in China, but those have been easing. Manufacturing partner Foxconn Technology Group has brought the world’s largest iPhone plant back to about 90% of anticipated peak capacity.

The Zhengzhou facility, known as iPhone City, is responsible for producing the majority of high-end iPhone 14 Pro and Pro Max devices. In November, thousands of workers had fled or staged protests against the extreme Covid-19 rules that were in place. However, Foxconn ended most of those restrictions last month and offered more incentives for both new and current employees.

Murata Manufacturing Co., another supplier for Apple, expressed pessimism last month when they said they expected Apple to reduce production plans for the iPhone 14 even further in the coming months. The iPhone accounts for a little under half of Apple's total revenue.

Nakajima said that he sees a downward revision happening based on handset availability in stores. He hopes that the revision won't be too deep.

Meanwhile, Nikkei has reported that Apple has told several suppliers to make fewer components for some products, including AirPods, the Apple Watch and MacBooks, due to weakening demand.

Apple is expected to release its latest quarterly earnings report in the coming weeks. The quarter that runs through December is typically its busiest sales period of the year, but analysts are now predicting a slight decline in revenue to $122.9 billion, according to estimates compiled by Bloomberg.

Apple's valuation is based on the hope that the company still has major growth opportunities ahead. Services have been a key area of expansion in recent years and now represent more than a fifth of revenue. The company is also working on some big swings, such as a mixed-reality headset that could be unveiled as soon as this year and an electric vehicle.