Apple Stock Slices Billions Off Market Cap For iPhone X Production Targets

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Apple Inc. (NASDAQ:AAPL) stock tumbled on Monday after another report from Asia indicating that the company may have slashed its iPhone X production targets yet again. As the Apple earnings report for FQ1 2018 approaches later this week, investors are likely seeing this latest report about iPhone X weakness as especially ominous.

Most analysts had already been anticipating weak guidance because the March quarter is expected to be weak, but what we’re hearing now could have very negative implications for the December quarter.

By Monday afternoon, AAPL stock had slumped to its lowest level in weeks.

iPhone X production targets slashed in half: report

Nikkei reported on Monday that Apple is slashing its iPhone X production targets for the March quarter in half. At the time of the November Apple earnings release, the company’s iPhone X production targets stood at more than 40 million units, according to the sources. However, now the company has reportedly told suppliers that it’s targeting only about 20 million units. The report seems to confirm what we’re been hearing again and again this month, but with a little extra kick.

According to Nikkei, the cause for the most recently-reported cut to iPhone X production targets is actually weaker-than-expected holiday season in important markets like the U.S., China and Europe. The media outlet adds that Apple’s most expensive handset yet has “failed to catch on globally,” and one possible reason is its sizable price tag.

Further, the weaker-than-expected sales could push back Apple’s plans to place OLED panels on its other iPhones, Nikkei added, without citing any sources for that information. The media outlet also reports that Apple had difficulties keeping up with demand for the iPhone X right after launch because deliveries of major components had been delayed.

Although the iPhone maker would not comment on its iPhone X production targets, Nikkei claims that “rising inventories” seem to have “pushed the company to sharply slow down production.”

AAPL stock slumps to lowest level in weeks

AAPL stock tumbled by about 2% to as low as $167.07 in intraday trading on Monday, which represents its lowest level in at least a month. Just over the last week alone, AAPL stock has fallen by about 5%, erasing more than $45 billion from the iPhone maker’s market capitalization, CNBC reported. Some analysts have even downgraded AAPL stock this month as concerns about weakness in the iPhone X continue to proliferate.

CNBC’s Jim Cramer said on Squawk Box on Monday that there isn’t a single person on Wall Street who still believes that Apple’s iPhone units in the March quarter will be as high as what was initially expected when the iPhone X was revealed. According to Cramer, the only question now is whether estimates for Apple earnings will fall so much that the company’s stock becomes expensive.

Despite this latest setback, he remains bullish on AAPL stock, saying that the pullback in the shares could represent a buying opportunity. He also advised against selling the shares. He said that although it’s possible to “make a little money” selling AAPL stock here, “I just don’t want to trade it,” adding that the company has “a little bit of money they could distribute to shareholders.”

Earlier this month, Apple revealed plans to repatriate most of the cash it holds overseas, which analysts generally expect it to use for dividends and share repurchases—in addition to the other investments it announced.