Apple Stock Price Down 3% on Lower Sales Forecast And Coronavirus Fears

Shares of Apple are trading nearly 3% lower in pre-market trading after the tech giant warned that the coronavirus epidemic is likely to impact the first-quarter sales.

Fundamental analysis: Lower iPhone supply globally

In a letter to investors, the Silicon Valley giant said it does not expect to meet the quarterly revenue targets due to lower iPhone supply globally and lower demand in China due to the deadly coronavirus outbreak.

Apple previously announced a decision to close some of its shops in China, or reduce working hours for some others. As many factories are still shut, supply chains are disrupted, which directly impacts Apple’s huge demand on a global scale.

The company previously communicated that it expects to generate between $63 billion to $67 billion in sales for the fiscal second quarter. Usually, Apple doesn’t use that wide range to predict its sales, but it did it so on purpose due to coronavirus uncertainty.

Analysts believe that Apple will be hurt more than other major tech companies due to its huge reliance on China.

Technical analysis: Risk is to the downside

Apple stock price trades around 3% lower today following the release of a letter to investors yesterday. The price closed near the record highs yesterday as the risk is now clearly to the downside.

As seen in the chart above, the price action has been trapped within an aggressive upward parallel channel for the past six months. A potential break to the downside would open the door for a bigger pullback. For this to happen, the bears must force a daily or weekly close below $300. All in all, this is a realistic scenario if investors see this as a legitimate opportunity to sell Apple stock.

Summary

Shares of Apple have opened lower today in New York after the tech giant warned that it is unlikely to meet its sales guidance for the current quarter. The bullish momentum may change for the Apple stock price as there is plenty of room for a correction lower.