Apple shares are lower heading into the company’s first earnings release.
AAPL – Daily Chart
The price of AAPL trades at $165.77 but sits on an uptrend line. A lower break could first target the $160 level, with stronger resistance around the $157.50 level.
Apple is expected to report a 4% drop in revenue, a second consecutive quarterly decline, as consumers cut non-essential purchases such as iPhones and Macs. The results will follow a better-than-expected earnings season for the big tech companies. US technology firms have cut thousands of staff this year as slowing economic growth cuts profits.
Apple hasn’t made any significant job cuts but is set to post its first-ever revenue declines across product lines, despite a recovery in iPhone demand in China.
“Apple is seeing moderate headwinds in its hardware businesses as iPhones face modest contraction in premium device demand and the iPad and Mac businesses could be weighed down by consumer and enterprise trends,” Cowen and Co analysts said.
Hardware sales are tipped to slow by 7% to $71.9 billion in the second quarter, as Mac sales, which comprise a tenth of Apple’s revenue, likely drop around 25%. Revenue from the iPhone is estimated to have dropped by over 3%.
According to data from research firm IDC, global PC shipments have declined almost a third in the first quarter of the year, driven by a drop of over 40% at Apple. The global smartphone market has slumped by 13% for a fifth-quarter decline.
AAPL Stock Price Forecast
However, Apple investors will look further ahead to the recovery in China, the company’s third-largest market.
Ahead of the earnings, US markets are weaker after another Federal Reserve interest rate hike and a significant drop in another Californian regional bank. PacWest and Western Alliance were two banks caught up in the recent banking turmoil in the United States. Many investors are questioning the desire to raise rates in the crisis. The debt ceiling negotiations are also happening in the background.
