iPhone’s Softer Demand Leads Barclays to Downgrade Apple

Analysts at Barclays are forecasting continued weak demand for Apple’s iPhone.

That forecast, and the downgrade that came with it, caused Apple’s stock to drop 3.6% Tuesday (Jan. 2), the largest one-day percentage drop in months, wiping out more than $107 billion in market value, Bloomberg News reported.

“We expect reversion after a year when most quarters were missed and the stock outperformed,” the bank’s analysts wrote in a note. “Our checks remain negative on volumes and mix for iPhone 15, and we see no features or upgrades that are likely to make the iPhone 16 more compelling.”

Apple’s market value reached $3 trillion last year as investors hitched their fortunes to the idea that consumers would keep buying iPhones.

But the Bloomberg report notes that doubts are forming about whether the company will be able to repeat last year’s big gains, as it faces increased competitions from companies like Huawei, along with China’s crackdown on iPhone use by government or state-owned company workers.

Apple CEO Tim Cook sought during the company’s last earnings call to ease concerns about the company losing market share in China to rivals like Huawei, arguing that the iPhone 15 models achieved a quarterly record for sales in mainland China during the September quarter.

Data released in November from investment firm KeyBanc Capital Markets showed iPhone sales running lower than historical trends, while store inventories are up. Consumers were showing healthy demand for the iPhone 15 Pro and Pro Max — something that has only partially offset slower sales of the iPhone 15 and Plus.

The past few years have been tough on the smartphone industry in general, with the industry going 27 months without seeing year-over-year growth, from June 2021 to October 2023, according to Counterpoint Research.

“Global smartphone sales have been under stress for the last two years due to factors including component shortages, inventory build-up and lengthening of replacement cycles,” Counterpoint Research said in a news release. “These issues have been compounded by an uncertain macroeconomic environment.”

Apple has also been dealing with other troubles on the device front. Last month, the company had to briefly pause sales of its two latest smartwatch models following a ruling by the International Trade Commission (ITC) that found the blood oxygen sensor in the devices infringed on intellectual property from medical technology firm Masimo.

The company later got a federal appeals court to pause the ban, allowing sales to continue.