Apple, Limited Impact from COVID-19... Expectations for China's Stimulus Measures

[Asia Economy Reporter Minji Lee] Eugene Investment & Securities stated on the 19th that although concerns are growing that Apple's first-quarter earnings may be weak due to the impact of the novel coronavirus (COVID-19), the strong stimulus measures expected in China will likely limit the impact on the stock price.

The previous day, Apple announced that it might not meet its previously provided revenue guidance of $63 billion to $67 billion due to the impact of COVID-19. This assessment is based on the slower-than-expected normalization of production facilities in China and a decrease in demand within China.

Researcher Seungwoo Lee of Eugene Investment & Securities said, “The production disruption issue could affect global sales and new product launches, which inevitably burdens the entire global technology sector.” On that day, Apple did not provide specific figures on how much revenue would decline. Apple's stock closed at $319, down 1.8% from the previous trading day.

However, if strong stimulus measures are implemented in China in the second half of the year, Apple's earnings improvement is expected to be significant. Researcher Lee explained, “IT demand in the second half of the year will increase significantly. Although expectations for the first half will be lowered, the possibility of semiconductor supply shortages in the second half will likely raise expectations again.”

One year ago, despite lowering its revenue guidance amid concerns over the US-China trade dispute, Apple's stock price showed an upward trend except for that day. Researcher Lee pointed out, “On that day, Apple's stock price dropped 10%, causing the entire global technology sector to fluctuate, but the stock price has never fallen more than that since then. Since that day, Apple's stock price has risen by about 130%.”