The shares of Apple dropped by five percent last Monday night after one of its major suppliers slashed its financial outlook. It resulted in fears that the demand for the iPhone has already plateaued.
The drop resulted in a loss of $50 billion (£38.9bn) from the market valuation of Apple with its shares dropping by $20.30 to $194.17.
The losses mean that the market capitalisation of Apple has declined by $190 billion since last month, more than the entire market value of US blue-chips such as Walt Disney, Oracle, and McDonald’s.
A supplier of 3D sensors that are used in the facial recognition technology of Apple’s iPhones, Lumentum Holdings, reduced its financial guidance for the second quarter last Monday. It cited a decrease in orders from an unnamed major customer.
Alan Lowe, the chief executive of the company, stated: “We recently received a request from one of our largest industrial and consumer customers for laser diodes for 3D sensing to materially reduce shipments to them during our fiscal second quarter for previously placed orders that were originally scheduled for delivery during the quarter.”
On the same day, Japan Display, the supplier or the liquid crystal display screens of the iPhone, also reduced its full-year guidance, blaming volatile demand from customers. Earlier this month, Apple released a warning that its sales for the Christmas season would not hit market expectations. It blamed the fall on the weakness in the emerging markets and foreign exchange costs.
Chaim Siegel, an analyst from Elazar Capital, stated: “Many suppliers have lowered numbers because of their unnamed ‘largest customer,’ which is Apple. Apple got cautious in their guidance and it’s hitting their suppliers.”
Analysts from JP Morgan reduced their target price for Apple by $4 to $270. They cited poor orders for the new iPhone XR.
The fall of Apple resulted in a larger retreat across equities in the United States last Monday night with the S&P 500 closing down by two percent at 2,726.22 and the tech-heavy Nasdaq dropping by three percent to 210.05.
Other tech giants such as Facebook and Alphabet, the parent company of Google, also dropped by 2.3 percent and 2.5 percent respectively.