Apple Stock Is Struggling. Why China Is the ‘Biggest Negative.’

China emerged as the main concern from the report with a revenue drop in the region reinforcing concerns about the effects of the country’s slow economic recovery and increasing competition from domestic companies.

Apple’s September-quarter revenue in China dropped 2.5% to $15.1 billion. That represented its lowest sales in the region since the middle of 2022 and 17% of the company’s overall revenue. 

Despite the decline, Apple actually set a quarterly record for iPhone revenue from the Chinese mainland and its quarterly revenue from Greater China grew in constant currencies. CEO Tim Cook told analysts on an earnings call that it was Apple’s Mac personal computers and iPad tablets that dragged down its performance in the country.   

That was enough to satisfy some of the bulls on the stock. Wedbush’s Daniel Ives kept an Outperform rating and a $240 target price on the stock. 

“The ‘iPhone China demise narrative’ was a great fictional story by the bears, which is far from the reality as underlying mainland China growth remains strong and a key asset for the core iPhone franchise,” Ives wrote in a research note. 

However, with only one week’s worth of iPhone 15 sales in the September-quarter results, others are still concerned about the threat posed by Huawei’s Mate 60 Pro smartphone and a sluggish Chinese economic recovery overall.   

“We believe the biggest negative from the results was the 2% year-on-year decline in China, worse than we expected, as we look for greater clarity about Apple’s outlook for the region in the December quarter, given concerns about increasing competitive pressures,” wrote CFRA analyst Angelo Zino. 

Zino kept a Buy rating and $220 target price on Apple stock.

Concerns about Apple’s outlook in China were intensified by the company’s guidance for flat sales in the December quarter from the same period a year earlier.

“While cognizant of the fact that there is one fewer week in the December quarter than last year, we view management’s flat sales guidance as proof the company cannot rely on iPhone sales to drive shares higher, as it has in the past,” D.A. Davidson analyst Tom Forte wrote.

Forte said Apple still faces geopolitical risks in China and overdependence on the country in its supply chain.

Forte lowered his target price on Apple to $166 from $180 and kept a Neutral rating on the stock.

Write to Adam Clark at [email protected]