Shares of Apple (NASDAQ: AAPL) traded lower on Monday, slipping as much as 2.4%. When the market closed for the day, the stock was still down 2.2%.
The major market indexes were all lower today, which no doubt helped fuel the stock’s decline. Another factor weighing on the tech giant was deteriorating conditions in China.
Numerous media reports suggest that the country is suffering its worst COVID-19 outbreak in months, with tens of thousands of new infections. This could further delay the availability of some of Apple’s most popular iPhones during the important holiday season.
China reported a new surge of COVID-19 cases, stoking fears the country’s strict “zero-COVID” policy will stay in place for a while longer. While reports vary, the country reported at least two deaths and as many as 26,824 new infections on Sunday, which marks the sixth consecutive day of more than 20,000 and the highest number of daily infections in more than seven months.
This comes just weeks after reports the Chinese government was considering an easing of its strict pandemic-related restrictions designed to slow the spread of the disease. Beijing, China’s capital city, has already started to institute new lockdowns in several districts, closing schools, shops, and restaurants.
Earlier this month, Apple took the unusual step of issuing a press release regarding operations at the assembly plant in Zhengzhou, China. The company said the facility, which works primarily on the iPhone 14 Pro and iPhone 14 Pro Max models, “is currently operating at significantly reduced capacity,” due to COVID-19 restrictions. As a result, Apple said it expects “lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated and customers will experience longer wait times to receive their new products.”
This latest outbreak will only exacerbate the issue, which will likely weigh on holiday sales during Apple’s fiscal 2023 first quarter, which will end in late December.
For shareholders, this is only a speed bump in the long-term growth story of one of technology’s biggest companies. It could mean, however, that the holiday quarter will be a little less merry for Apple investors.
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Danny Vena has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
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