Apple Inc. (NASDAQ:AAPL) stock seems to be testing its support levels following the bearish trend which saw its stock drop by almost 2 percent on Monday just days before its earnings report.
The recent drop in the value of the iPhone maker’s stock marks its worst week since September last year. The poor performance was as a result of negative news such as the latest announcement that reduced iPhone production due to low demand. This has obviously influenced investors to lose confidence in the stock and this has been reflected in the poor performance that has kicked off this week.
The stock seems to be testing the support levels which are about the same levels as the lows that the stock registered in November and December last year. The bearish trend this week wiped out roughly $14 billion from Apple’s market cap. Toni Sacconaghi, an analyst at Bernstein slashed his iPhone forecasts for the second quarter as well as the entire year. However, the analyst also stated that he does not expect the company’s profits for 2018 to fall too far compared to those of 2017 due to the U.S tax law changes. This is because those changes will effectively reduce Apple’s tax rate to 18 percent.
“Apple earnings should handily beat December quarter expectations, but March guidance could moderately disappoint,” pointed out UBS analysts.
Apple has resulted to reducing the number of iPhone units being produced due to the fact that iPhone sales during the 2017 holiday season were not as good as the company expected. This particularly refers to its major markets including China, Europe, and the United States. Apple was particularly hoping that the iPhone X would record impressive sales considering that it marked a complete design overhaul and it was also the 10th-anniversary device.
The iPhone maker not released any sales number for the iPhone X and it is expected to do so during the upcoming earnings report. However, there has been speculation that sales have not been as forthcoming following the manufacturer’s decision to slash production.
Apple stock closed the latest trading session on Monday at $167.96.