Apple Inc. has a gloomy cloud hanging over the firm and its share price as it delivers its first quarter earnings today. Shares of Apple have been getting hammered since the markets opened for trading this year. The stock has lost its place among firms that have triple-digit share prices as its share price dropped below $100. On Monday, the shares of Apple were down $2.01 as the stock closed at a $99.44 trading price.
The weakness in Apple’s share price is a function of weak investor optimism about the prospects of the stock. In the last couple of months, analysts have been hinting that Apple might not be able to meet up with its past record iPhone sales as the demand for the iPhone 6 and iPhone 6S pales in contrast to the demand for previous models. The weakness in iPhone demand seemed to be confirmed by data suggesting that Apple has reduced the orders it usually places to its Asian suppliers
Apple’s fate hangs in the balance today
The market will decide on the trading price, fair value, growth prospects, and long-term outlook on Apple after the firm releases its earnings today. Many analysts have reduced their forecasts about iPhone shipments in light of recent revelations about a drop in the demand. Nonetheless, most of the analysts with a pulse on Apple’s stock have a price target that provides a double-digit percentage upside over the current trading price.
Apple will most likely deliver an earnings beat and a revenue outperformance when it reports earnings today because the firm would have enjoyed tailwinds from the holiday season. An earning beat won’t have much influence on how the shares of Apple trade today; however, an earnings miss (though unlikely) might send the share price lower. However, the market will be most interested in seeing Apple’s guidance for the next quarter and fiscal 2016.
The guidance is crucial because it will be the most important factor that will determine how investors perceive the prospects of Apple going forward. If the firm reports a strong guidance, investors will be quick to dismiss the rumors about declining iPhone sales because a strong guidance indicates that the firm expects its sales to increase going forward. On the contrary, if Apple reports a weak guidance, the firm would have confirmed the rumors about slowing iPhone sales and the share price might fall lower.
Apple slows Project Titan
Apple is reported to be building a car through its Project Titan team and Tesla Motors Inc CEO, Elon Musk has said that it is an “open secret” that Apple is indeed building a car. Musk is in the right position to confirm Apple’s car rumors because he has lost some key engineers to the poaching team from Apple. However, appleinsider reports that Apple has imposed a hiring freeze on the team working on the rumored iCar after a post-holiday progress review.
It was reported that Apple’s design chief, Jony Ive has “expressed his displeasure” over the direction that Project Titan is heading towards and the progress that the team has made so far. It has been rumored that Apple has more than 1,000 people working on the iCar – but it seems that the team has become bloated to a point where no one seems to be doing any meaningful work. Over the weekend, news broke that Steve Zadesky, a veteran Apple engineer leading the Project Titan team, is leaving the firm for personal reasons.
No one outside of Apple seems to know why Zadesky is leaving and no one knows how is departure might affect the development of the iCar. However, it is certain that Apple’s Project Titan has veered off course for its 2019 rollout target and the firm needs to regain a balance for its iPhone on wheels as the first iPhone starts to lose its shine.