Apple’s revenue may take a minor hit this year from the Chinese Communist Party’s recent move to further curb the use of iPhones by government employees in China, but Morgan Stanley analyst Erik Woodring says the selloff in Apple’s shares are “overdone.”
Apple shares tumbled 6.4% over the last two days, wiping $190 billion from its market capitalisation, following news Beijing ordered some central government employees in recent weeks to stop using iPhones at work.
Morgan Stanley analyst Erik W Woodring said Apple’s share losses were “overdone” as he does not believe the curbs will lead to something broader. He added the worst case scenario was a 4% revenue hit and a 3% earning impact for the company.
“China is critical to Apple’s success, but Apple is also critical to the Chinese economy. While the potential for a broad decoupling between Apple and China in this multipolar world clearly exists, we don’t believe recent headlines are necessarily foreshadowing this ‘worst case’ scenario,” Woodring said.
MacDailyNews Take: Yup.
See also:
• Wedbush: China’s government worker iPhone ban is way overblown – September 7, 2023
• Citi: The market may have have overreacted to China’s state employee iPhone curbs – September 7, 2023
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Is there a butterfly in the room?
The whole China “ban” is likely the CCP govt trying to cover their tracks for sponsoring hacking into Apple devices’ wallets, and also to try to stop their employees from keeping their actual beliefs hidden from the regime.
China seems to be doing its best to shoot itself in the foot while at the same time India is on the rise and will one day be Apple’s biggest market.
Short of a nuclear apocalypse that destroys the west, India will never be Apple’s biggest market. And if things ever get to that point we’ll have bigger problems to discuss, if we’re alive. US avg. incomes are 30x higher than in India, they’ll never be close. US incomes are STILL 6x that of China, at what looks like the latter’s peak.
Stock analysts are highly motivated to opine favorably on their companies so if you are inclined to believe a used car salesman regarding the quality of an auto he’s trying to sell you then…. In this case, IF Xi/China does not take any vindictive action against Apple in response to the coordinated attacks on their industries, then yes the sell off now will have proven to be overdone. However, we can’t know the future, and Apple is horribly exposed because it has most of its manufacturing and supply chain centered in and around mainland China. If Xi shuts down all sales in China, Apple will survive, but if he shuts down manufacturing then they’re bankrupt. Cook seems finally motivated to get things shifted out, but the risk exposure will remain for years given how difficult it is to move.