Apple stock fell as much 5% in extended trading while iPhone revenue came in at $26.4 billion despite beating Wall Street prediction.
The decline in Apple stock comes after iPhone revenue was reported 20% lower than the same quarter last year.
Apple’s new iPhones went on sale about a month later than before. Analysts from CNBS believe that iPhone weakness may be caused partly by people waiting for the new iPhone 12, which did not go on sale until October.
Both Apple CEO Tim Cook and CFO Luca Maestri pointed out that iPhone customer demand was high and rose until mid-September when Apple usually offers new iPhones.
“This is a very impressive level of performance when we consider that this year we did not launch and ship any new iPhone models during the quarter,” Apple CFO Luca Maestri said about Apple’s fiscal fourth quarter, which ended in September.
Apple in China
Apple sales in China saw a decline, mainly because of weak iPhone sales, according to the company. Revenue from China fell to $7.95 billion from $11.13 billion a year before, a 29% decline.
According to Will Wong, research manager at IDC, the Apple iPhone 12 range with 5G connectivity will be important in China.
Apple introduced four new 5G-capable iPhone models earlier this month. 5G networks are still new but China’s networks have been working on the expansion of coverage. This made an impact on 5G smartphone sales, particularly from local players like Huawei.
Apple is now participating in the trend, a huge step in a market that makes for about 15% of the US tech giant’s total sales.
“If we look back to (the) second quarter of the year, almost half of the smartphones shipped in China had 5G connectivity,” Wong told CNBC. “Among the top 5 vendors in China, Apple was the only one without a 5G model. Having an upgrade of 5G will be very important for Apple to continue to attract the attention of the Chinese market.”
CCS Insight, a market analysis firm, affirms that China is the world’s biggest 5G smartphone market and the country with the most number of 5G connections.
China, the world’s second-largest economy, appears to have managed the coronavirus pandemic. Economists have noted signs of economic recovery and resumption of consumer spending.
Apple valuation
Apple has become the first US company to reach a valuation of $2 trillion on the stock market after its share price hit $467.77 in mid-morning trading in August.
Despite the coronavirus pandemic’s impact on its business, including the closure of retail stores and political pressure over its links to China, Apple’s shares have increased by over 50% this year.
In particular, its share price has been twice that of its low point in March, when the market was affected by the widespread panic around the virus.
The company posted strong third-quarter numbers towards the end of July, which includes $59.7 billion of revenue and double-digit growth in its products and services segments.
Paolo Pescatore, a technology analyst at PP Foresight, called Apple’s rapid share price increase as “an impressive feat within a short period of time”.
Pescatore explained: “The last few months have underlined the importance of users and households alike to own better quality devices, connections and services, and with Apple’s strong broad portfolio of devices and a growing services offering, there are plentiful opportunities for future growth.”
He added that the launch of gigabit connectivity broadband would give Apple “endless possibilities”. He claimed: “All eyes are now on the eagerly anticipated 5G iPhone which will fuel further consumer demand.”
