Morgan Stanley seems to have become a grief bearer for Apple in the latest trading session. The latest update from Morgan Stanley has resulted in a 1% loss in the share prices of the tech giant.
Morgan Stanley Reduced Shipment Forecast
Morgan Stanley is known for being one of the largest and most reputable investment firms in the entire world. The firm has millions of investors looking up to its predictions and speculations about the stock markets.
Most importantly, the investors take its predictions and estimations about the companies very seriously. This is the reason why even a company like Apple had to suffer a 1% loss in share prices after the firm’s latest prediction.
The firm has reportedly reduced the forecast for shipments of iPhones in the December quarter. The firm had already reduced the shipment forecast for Apple’s iPhones in the same quarter.
However, the firm has done it again and this time, they have reduced their forecast for the shipments by 3 million units. According to sources, the decision was made by Morgan Stanley analysts on Wednesday.
Slow Production in China
Morgan Stanley has also provided a clear explanation that has forced them to lower their forecast for the shipments.
The analysts at Morgan Stanley also circulated a note for the investors confirming their action on Apple’s stocks.
The analysts have added that they are seeing a major dip in production from China’s end. Apple is definitely going to face a downtrend in sales due to the Chinese lockdowns.
The country has been facing an alarming COVID-19 situation and it is doing whatever is in its power to contain the situation.
Despite the efforts, China is forced to implement strict lockdowns to control the spread of the coronavirus.
Foxconn, which is the largest chip assembler for Apple in the entire world, is also facing a major setback due to the Chinese lockdowns.
The largest assembly facility of Foxconn is based in China and it is also facing major issues at the location including protests from workers.
Taking these upsets into consideration, Morgan Stanley has reduced its forecast for the units of the latest iPhone 14 models and their variants.
9 Million Units Reduced by Morgan Stanley
This is the second time in the same quarter Morgan Stanley has reduced the shipment forecast for Apple. Morgan Stanley had to do the same thing with the shipment forecast for iPhones back in November.
A month back, Morgan Stanley reduced the unit shipment by 6 million. This time, the reduction is half of the reduction from November.
In total, Morgan Stanley has reduced the shipment forecast for the running quarter by 9 million. It is a sign for the investors that Apple is going to see a dip in its sales for the current quarter.
Eventually, the company’s revenue will be badly impacted by Morgan Stanley’s decision and the investors are also trying to digest the entire situation.
The situation has Turned Ugly for Apple
Apple has difficult days ahead of it because iPhone is the largest revenue-generating segment for the tech giant. If there is a sale reduction in the iPhones, it will be catastrophic for the company’s overall revenues.
With Apple having reduced its shipment forecast by 9 million from a major investment firm, the investors are ought to react. Their reaction will be to keep themselves from any further losses.
The situation is bad for Apple because the overall stock market is already in a bad shape. The investors are already facing many losses and Apple stocks were like a safe haven for them.
If Apple also ends up facing the same situation, then it will be problematic for the traders. They will eventually look for other stocks, causing a major pull in Apple’s share prices.
The latest update from Morgan Stanley has already caused a 1% dip in Apple’s share prices. The plunge can become aggressive once Apple shares its earnings for the fourth quarter of 2022.
Initially, Morgan Stanley had set its unit shipment forecast for Apple’s iPhones in the fourth quarter to 85 million units. Following the reduction, the overall shipment forecast is now down to 76 million units.