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Amidst the economic bloodbath caused by COVID-19 and global oil prices, stock indexes have fluctuated wildly over the course of this week. The brief repose of gains after Monday's drops was wiped off again today as level one circuit breakers kicked in following the Standard and Poor 500 market index dropping by more than 8% minutes following the opening bell.
The NASDAQ 100 index did not fare well either, also dropping by as much as 8%, Dow Jones Industrial average taking the largest hit through a 9% drop within half an hour of the market open. For the NASDAQ, Cupertino tech giant Apple, it seems, is proving to be a heavy customer.
iPhone Supply Chain Disruption Hurts Apple Inc (NASDAQ:AAPL) On The Open Market Amidst Major Drops In Indexes
At market open today, Apple's stock was ready to plunge to depths ensuring that gains made by the company's share price resulting from strong customer reception of the LCD-based iPhone 11, AirPods gaining market share and users spending record amounts on the App Store, would be wiped off.
As trading commenced today, Apple opened at a share price of $255.52, down by roughly 7% over yesterday's close. The shift represented iPhone supplies drying up in China, a fact noted by KeyBanc's analyst John Vinh. Mr. Vin, in a note sent out to investors, stated the reasons behind Apple's various stores running out of the smartphone's inventory and sales coming to a halt at the same time due to reduced movement in areas severely impacted by the COVID-2019 outbreak.
Apple's drop marked the continuation of global markets receding prior growth. Regulators inside the United States were on their toes following market open, as investors in this side of the Atlantic braced for impact from a sea of red heading over from Europe, as the DAX, FTSE and CAC all having posted drops exceeding 8% during trading today.
Major price drop wipes away more than $100 billion in market capitalization
At 09:50 AM, following the expiration of the S&P500's circuit breaker, indexes seemed to be in for a longer bloodbath as they continued to drop before stabilizing and reversing a handful of basis points of decrease. Apple itself at the time of publishing is now above a 7% drop over yesterday's close, roughly mirroring the NASDAQ Composite's but staying above the S&P 500's negative trend line. Minutes after the breaker expired, the company's share price dropped to $250.955, in an 8.8% drop over Wednesday's close. The company has 4,375,480,000 shares outstanding as per latest filings and a $24/share drop in price roughly equals $100 billion lost in market capitalization.
However, interestingly, short-sellers seem to be optimistic about Apple's future. News of the coronavirus outbreak isn't new anymore as the outbreak enters its third month officially. And given the dependence of Apple's supply chain on China, pessimism is bound to be rife in investors' minds as they watch the stock go down.
Short-seller sentiment injects mystery into investor outlook and hints at recovery
However, once we look at short-seller sentiment, things start to get murky. Short interest in Apple is currently sitting at its lowest point of the year for 2020 - an oddity given COVID-19's impact. And, after looking at share volumes, it's clear that store closures and inventory shortages from the virus reported today by Keybanc are far from investor's minds.
Apple, it seems, is in the clear when it comes to negative sentiment exhibited by at least one indicator. Yet, trends for the month of March do not seem to be moving in the company's favor for the time being, and whether they continue to move upward will depend on the speed and scope of China's manufacturing recovery. For those interested in the company's product performance, an uptick in iPad sales due to school closure is a sliver of hope emerging from recent chaos, but it's unlikely that this will mitigate the 55% year-over-year drop exhibited by iPhone unit shipments in China.
At the time of publishing, Apple Inc (NASDAQ:AAPL) is down by 6.6% over yesterday's close and trading at $257.18 as it battles a market-wide downturn spurred by global supply chain and purchasing disruptions and aided by the price war between Saudi Arabia and Russia.