Apple Shares Drop To The Lowest Level Seven Weeks After Downgrade Barclays

Apple shares fell nearly 3.6% to their lowest level seven weeks after Barclays lowered its share rating (photo: x @apple)

JAKARTA - On Tuesday, Janurai's 2 Apple shares fell nearly 3.6% to a seven-week low after Barclays lowered the share rating of the world's largest tech company. The downgrade decision is based on concerns that demand for Apple products from iPhones to Macs will remain weak by 2024.

Barclays is the second brokerage company to rank equivalent to a "sell" in Apple shares, so now the shares have the highest number of bearish recommendations in at least the last two years, according to data from LSEG.

Apple shares accounted for 7% of the S&P 500 market weight - a wider index down 0.56% on Tuesday. Apple rose nearly 50% in 2023, hitting record highs in mid-December in the year Big Tech took the market lead.

Apple has faced a slowdown in demand since early last year and has projected holiday quarter sales below Wall Street forecasts. Its performance in China is also a concern after the rise of local competitor Huawei.

"The iPhone 15 is unsatisfactory, and we believe the iPhone 16 will have the same fate," Barclays analyst Tim Long said in a note to his client. He pointed to weaknesses in China as well as the growing demand for markets.

Long is ranked fourth out of five stars for its recommendation accuracy regarding Apple, according to LSEG data.

The brokerage company also warns that risks are increasing for Apple's service business, which has been in the spotlight in several countries including the United States regarding its app store practices.

Sales of the service business have often surpassed Apple's hardware segment growth in recent years and now accounts for nearly a quarter of the company's total revenue.

Tuesday's stock chaos removed more than $100 billion from Apple's market cap, as its shares closed in 185.64 US dollars (IDR 2.8 million).

Barclays lowered the share rating to "underweight" from "neutral" and cut its 12-month price target by $160. Before Tuesday, the "shell" of Itau BBA was the only bearish rating on Apple since July 2022.

On average, analysts rated "buy" at the iPhone maker, with a median price target of 200 US dollars. The company is trading around 28.7 times its 12-month forward earnings forecast, much higher than the 19.8 S&P 500.