Apple stock drops after China slashes iPhone prices
The tech company's shares are down after China cuts prices for the iPhone.
Apple stock is plummeting after China retailers are cutting the prices of its latest iPhones. The sales slowdown in one of Apple’s largest consumer bases is concerning investors.
Why are iPhones not selling in China?
The sluggish sales of iPhones are part of a larger problem in the Chinese economy. The US-China trade war is having an impact on Chinese consumers, who want more affordable smartphones. Many retailers in the Asian nation feel that the $1036 (¥6999 yuan) price of the iPhone XR is too much for consumers. Merchants are selling the devices for $651 (¥4399 yuan) for an iPhone 7 trade-in.
Apple chief executive officer (CEO), Tim Cook, noted that the trade war possibly caused iPhone sales to decline in China. While Cook thinks the US-China trade ear is to blame for poor device sales, Daniel Ives, managing director of equity research at Wedbush Securities, disagrees.
‘The trade war is background noise and more of a scapegoat excuse with the real issues being iPhone XR demand and a mispriced product in a competitive Chinese market,’ said Ives.
Competition from Chinese phone companies like Huawei have also cut into Apple’s profits in the country. Though the iPhone has the most cutting-edge technology, Neil Camplin, head of technology, media, and telecommunications research at Mirabaud Securities says the devices are missing a key element for Chinese phone purchasers.
‘For the next 12 months, the iPhone lacks one of the most appealing features of current winners in the Chinese smartphone market, the triple lens camera. The Huawei P20 Pro led the march and other Chinese manufacturers are all scrambling to follow suit as it has been so popular,’ said Campling.
What can Apple do to improve iPhone sales?
Chinese consumers like, Karen Xiao, told CNBC that the new iPhones don’t offer enough change from older models to justify the price. Xiao just wanted a no-frills, functional device.
‘For me, the function is good enough. For me, using the internet and just phones — I don't play games. So the function can satisfy my needs,’ said Xiao.
Apple will have to combine affordable practicality with innovative 5G technology to its iPhones to win over Chinese customers.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
See an opportunity to trade?
Go long or short on more than 16,000 markets with IG.
Spread bet and trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.
Live prices on most popular markets
You might be interested in…
Find out what charges your trades could incur with our transparent fee structure.
Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.
Stay on top of upcoming market-moving events with our customisable economic calendar.