Sunday 25 September 2016

Apple growth: Five reasons it's stalling and could have repercussions

Published 27/01/2016 | 09:49

IF there was one thing investors could rely on from tech giant Apple, it was growth.

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Now, though, Apple has forecast its first sales drop in more than a decade with analysts believing the stock's days as a growth one are coming to an end as it shows signs of becoming a value one.

And with that comes lower valuations, at least traditionally.

This is despite selling a record 74.8 million iPhones in the last quarter of 2015.

Here are five reasons that growth is losing steam and there could be wider implications:

1. China: Demand from the world's second biggest economy helped catapult Apple into the growth sphere but it has cut orders for the latest iPhones amid signs of slowing demand. Earlier this month, China said i2015 experienced the slowest growth for the region in 25 years. Apple shares have fallen 25pc since July.

2; iPhone sales: iPhone sales are one of the main reasons that Apple has the biggest stock market valuation in the world.  But many analysts

believe that after record sales in the last quarter of 2015, the first three months of 2016 will show much slower growth and that sales have peaked.

3. Pipeline:  We know Apple is working on a car but we are short on details. And while full of surprises, the company usually haw a few innovations  on the go. A lack of visibility could be an issue here although it did enter the wearable technology market last year.

4 Apple effect: In many ways, Apple's soaring growth help buoy the technology sector in general. If these shares were removed from the stage, it could mark drops for the Standard & Poor's 500-stock index, for example.

5; Opportunities: Still, activist investor Carl Icahn is not spooked and he is a big investor in Apple. He claims to have spent more than $4bn on the stock, which is still less than 1pc of the firm.

 

 

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