With news that Apple will be cutting the production of the IPhone X by half, investors are rushing to sell Apple shares. Apple shares are down almost 6 percent within 5 days of trading with a possible 10 percent decline if the stock price should reach US$162.
Even though the stock price has seemingly decreased in value over the past few days, it is important to note that Apple stock increased by 37 percent over the past year. In a similar case, in the first quarter of 2017, Apple cut the production of the IPhone by 10 percent. Prior to the cut in 2017, the production of the IPhone 7 was cut by 20 percent.
With this news, IPhone sales increased to US$79.29 million, resulting in the stock price increasing from US$120 to US$140 in a month. This continued with increases in sales for the following quarters in 2017.
Apple releases its annual report on February 1, 2018 and analysts are optimistic that the review will be positive. Reason being, the IPhone X is the most expensive iPhone Apple has made and this should increase the average selling price compared to last year. In addition, customers are still purchasing earlier models.
It is argued that even if the IPhone X is a disappointment in terms of a decrease in sales in 2018, there is no need for investors to panic. Apple has very high cash reserves when compared to other tech companies and should be able to repurchase its own stock and innovate other products in the event it suffers from a terrible decline in sales.
Any decline in a stock price is reason for concern, however, this is a great buying opportunity for many investors. But since these rumours have not yet been confirmed by Apple, would you sell your Apple shares fearing the stock price will continue decreasing?
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