Apple’s warning wasn’t a shock. It was the magnitude of it.
Thanks to the coronavirus, Apple just said, “Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated. As a result, we do not expect to meet the revenue guidance we provided for the March quarter due to two main factors. The first is that worldwide iPhone supply will be temporarily constrained.”
“While our iPhone manufacturing partner sites are located outside the Hubei province — and while all of these facilities have reopened — they are ramping up more slowly than we had anticipated. These iPhone supply shortages will temporarily affect revenues worldwide.”
Of course, the news rattled tech.
Quorvo (QRVO), which derives 30% of its revenue from Apple, fell 2.6% to $103.26. Broadcom (AVGO) slipped nearly $10 a share. Micron Technology (MU) was down 2.8%. NVIDIA (NVDA) slid slightly, as did Xilinx (XLNX).
It’s Creating a “Blood in the Streets” Opportunity
The news is creating a “blood in the streets” opportunity.
Or, as Sir John Templeton would advise – buy the excessive pessimism. After all, Apple did add that the worldwide iPhone supply would only be “temporarily constrained.”
Once the news has been priced in, many down and out stocks may be worth buying.
Long-term bulls for example aren’t throwing in the towel, says MarketWatch. “While trying to gauge the impact of the iPhone miss and potential bounce back in the June quarter will be front and center for the Street, we remain bullish on Apple for the longer term 5G supercycle thesis despite today’s news,” said Wedbush analysts noted.
Apple Analysts are Still Bullish
There appears very little concern that the current issues will have lingering effects.
In addition, some analysts aren’t swayed by the latest news. Piper Jaffray for example sees the pullback as a buying opportunity, as reported by CNBC. “We believe any material weakness…will prove to be a buying opportunity, as, in all likelihood, this is a temporary situation that will leave future quarters largely unaffected.”
“In fact, the iPhone supply constraints in the current quarter could result in pent-up demand for future quarters. Looking at the remainder of FY 2020, current iPhone demand (outside of China) appears to be strong, non-iPhone (especially wearables) remains solid and anticipation is growing for 5G iPhones,” they added.
