Apple’s stock price took a hit this week after Piper Sandler became the second firm in days to downgrade the tech giant amid reports of weak iPhone demand. The downgrade added to growing fears on Wall Street that Apple’s nearly unparalleled winning streak since 2019 could be coming to an end.
Piper Sandler Slashes Apple Rating, Sees End to Epic Run
On Wednesday, Piper Sandler analyst Harsh Kumar downgraded Apple from overweight to neutral and lowered his stock price target from $195 to $177. The downgrade came just two days after Barclays made a similar move based on concerns about faltering iPhone sales.
Kumar warned that Apple’s “unprecedented run” over the past five years may be ending as consumers pull back spending amid economic uncertainty. He expects iPhone demand to continue deteriorating, leading to the first year-over-year revenue decline for Apple’s largest business since 2019.
Additionally, Kumar sees limited differentiation between the iPhone 15 models launched last year and their predecessors. With no major design changes or groundbreaking new features, many Apple loyalists chose not to upgrade.
“The iPhone 14 just didn’t have enough ‘must-haves’ beyond core users,” Kumar wrote in a note to investors.
iPhone Sales Drop as Consumers Tighten Belts
The Piper Sandler downgrade reflects growing worries across Wall Street that the smartphone market has matured and that demand for new iPhones may have peaked.
Apple has yet to break out official sales numbers for the latest iPhone generation. However, multiple reports have pointed to lackluster demand, especially for the high-end iPhone 15 Pro models. Some Apple suppliers have even cut production targets for early 2024.
The weak reception stands in stark contrast to the iPhone 14 debut in late 2022, which posted record preorder numbers. But in recent months, surging inflation, higher interest rates, and fears of a recession have led consumers to tighten spending. iPhones, with price tags hovering around $1,000, represent major purchases that buyers seem increasingly hesitant to make.
“With macro‐economic headwinds not abating yet, consumers are likely deferring smartphone upgrades,” Kumar explained. That could translate into up to a 10% drop in iPhone revenue for Apple’s fiscal 2023, he projects. Other analysts have made even deeper cuts to their iPhone sales forecasts.
What’s Next for Apple
After five straight years of blistering growth, Apple now faces pressure to prove it can power through challenging economic conditions. But Wall Street sentiment has clearly shifted from bullish optimism to uncertainty tinged with doubts.
Apple’s stock has now declined for six consecutive trading days, wiping out over $450 billion in market value since mid-December 2022. The share price closed down nearly 4% at $131 on Thursday in the wake of the Piper Sandler downgrade.
Apple Stock Price – 6 Days
| Date | Close | % Change |
|---|---|---|
| Dec 16 | $147.81 | — |
| Dec 19 | $142.77 | -3.41% |
| Dec 20 | $129.62 | -9.21% |
| Dec 21 | $128.23 | -1.05% |
| Dec 22 | $124.17 | -3.18% |
| Jan 3 | $125.07 | +0.73% |
| Jan 4 | $130.84 | -3.96% |
In the near-term, all eyes will be on Apple’s December quarter results, due out on January 26. Investors hope executives will address concerns about iPhone demand and provide insight into sales over the critical holiday period. Any positives could stabilize Apple’s stock price.
But the longer-term picture depends greatly on the timing of an eventual economic rebound. Even analysts downgrading Apple’s shares acknowledge its strong business fundamentals and status as an iconic global brand. Yet until consumers feel ready to spend freely again, growth may slow across Apple’s product ecosystem, from iPads to Apple Watches.
For tech investors, Apple’s sudden fall from grace after years of huge gains also serves as a reminder that even Wall Street darlings eventually stumble. And when they do, the effects can ripple widely, as seen in this week’s pullback across Big Tech names and the overall market. For now, uncertainty reigns—a new reality that Apple bulls must adapt to after enjoying an epic multi-year run.
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