Sunday , November 29 2020

To the top and back: Apple wiped $ 300 billion from its record capital

After the technology giant Apple entered the news headlines in August, becoming the first US company (and the second in the world at all), it had a market capitalization of 1 trillion. the media are now struggling to report the negative trends in its value and the continuing decline.

The Cupertino company hit the trillion peak on August 2, 2018, and two months later, on Oct. 3, achieved a record $ 1.1 trillion. dollar. Then, however, its shares gradually began to become cheaper. Thus Apple entered the month of November with a market capitalization of 1,055 trillion. dollar, and to date its value has gone down to 817.5 billion dollars.

From the record 1.1 trillion. dollar so far the company has erased a total of nearly $ 300 billion of its capitalization.

But why?

On this logical line comes the next hint for bad results. In recent years, Apple has decided to react to the slowing pace of the mobile market with rising prices for the items. This helped keep her income high, but the question is how long this formula will deliver positive results. "I think the real concern of investors is how long it can hold," says Angelo Zino, an analyst at CFRA. The cheapest phone of the brand is sold for about $ 750, for example.

Given the expectation that the smartphone market will continue to shrink, analysts say the future for companies such as Apple is also developing a new business. In the case of the Cupertino giant, it is about services like ApplePay, AppleMusic and AppStore, the hope of which is to become the next engine of growth, BBC says. The company's goal is to attract revenue of about $ 50 billion in 2020. The ambitions of the giant are also in the direction of the health and film industry, where plans are even more unclear. All this makes investors to date not be confident about the company's ability to make this sharp turnaround.

"If we know that sales of iPhone models will be equal or downwards and there is nothing else to compensate for this, of course, there are reasons to worry," said Caroline Milanesey, analyst at Creative Strategies, a market research firm quoted by the British edition.

However, she points out that it is still too early to draw conclusions. Milansei explains that it will be more worrying if after a year the service business has not yet taken the ascending curve expected by the analysts.

Last but not least, is the geopolitical problem between the US and China. The collision between the two countries suffers the entire technology sector, including a giant like Apple. The positioning of the company is influenced by currency fluctuations and rising interest rates. In addition, it should be noted that the iPhone manufacturer has its own bases in China.

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Tags: apple | iPhone | market capitalization

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