Apple shares rebound after Tim Cook releases rare email on China
Apple chief executive Tim Cook halted a 13pc drop in the tech giant's stock on Monday after taking the unusual step of emailing a media organisation to reassure investors about the business's Chinese operation.
With Chinese stocks plunging close to 9pc, Apple shares slumped as much as 13pc to a year-low of $92 amid a sell-off in the broader US market.
Mr Cook took the rare step of commenting on the health of Apple's business midway through a financial quarter. Before the opening bell on Wall Street on Monday, he wrote to CNBC to reveal that iPhone activations in China had accelerated over the past few weeks.
He also said the App Store in China had its best performance of the year over the past fortnight.
"Obviously I can't predict the future, but our performance so far this quarter is reassuring. Additionally, I continue to believe China represents an unprecedented opportunity over the long term," Mr Cook wrote.
Apple's shares then reversed its losses to trade up 2.25pc at $108.12, adding around $85 billion to Apple's market capitalisation from its earlier low.
“The fact that [Cook] publicly gave some positive signs around what Apple is seeing out of China during this market meltdown is a huge sigh of relief for investors who have started to have nightmares about what China can become over the coming years for Apple,” said FBR analyst Daniel Ives.
Chinese consumers are critical to fuelling demand for iPhones, and a slump in the country's stock market and Beijing's recent devaluation of the yuan have shaken Apple investors already worried about slowing growth in the world's second largest economy.
Apple's success over the past decade has made it a top holding for many portfolios and it accounts for 3.5pc of the S&P 500, indirectly affecting millions of investors saving for their retirements through passively invested index funds.
Many on Wall Street remained cautious about risks Apple faces in China's potentially stumbling economy. After Monday's rebound, Apple's stock was still down about 19pc from its record high close set in February.
"I am concerned about a slowdown in Apple's demand from China and I think they haven't even seen the extent of it yet," said Cowen and Company analyst Timothy Arcuri.
Such fears were exacerbated last week after a Gartner report said smartphone sales in the country fell for the first time ever in the previous quarter.
China's smartphone market is widely believed to be close to saturation with fewer first-time buyers, although Apple has continued to gain market share there.