In an unexpected turn of events, Apple Inc. is experiencing its worst start to the year in recent history, facing a fifth consecutive day of stock losses. The shares of the Cupertino-based tech giant dropped 0.4% on Friday, closing at around $181, a decline triggered by mounting challenges, including diminishing iPhone sales and patent disputes.
Adding to Apple’s woes, there are reports hinting at the Justice Department’s increasing proximity to filing an antitrust case against the company. If pursued, this legal battle could challenge Apple’s tightly integrated business model of devices and services, potentially disrupting its operations.
The week started with two consecutive ratings downgrades and analysts highlighting a weak macro environment in China, which is impacting iPhone demand. Analysts are grappling with the rarity of two consecutive downgrades, a phenomenon never witnessed before an earnings report in Apple’s history. The downturn marks the most significant market value destruction for Apple at the start of any year on record.
This challenging period is exacerbated by Apple’s recent patent infringement case, where the International Trade Commission found the company guilty of violating a patent held by blood pulse oximeter maker Masimo. The negative trajectory is prompting a significant rebalancing of portfolios by investors, with many selling winners like Apple and redirecting funds to perceived losers.
In terms of market value, Apple has seen a staggering $177 billion wiped off this year, narrowing its lead over Microsoft to less than $100 billion. The mounting concerns about iPhone sales have led to a second analyst downgrade this week, underscoring the scrutiny on Apple’s stock price.
The company’s value has plummeted by $155 billion in a single week, more than three times the value of Ford. While Apple still holds the title of the world’s most valuable publicly-listed company, Microsoft is closing the gap with a current valuation of $2.73 trillion.
Amidst these challenges, Microsoft has been gaining ground with its artificial intelligence ventures, particularly the $13 billion investment in OpenAI and ChatGPT. Beyond the immediate market dynamics, Apple faces additional hurdles in China, with competitors like Huawei gaining market share, and government restrictions on iPhone use impeding further growth.