Apple (AAPL) - Get Apple Inc. Report shares slumped from their all-time peak Thursday following reports that the world's biggest tech company has cautioned suppliers over waning iPhone demand heading into the peak of the holiday shopping season.
Bloomberg News reported that Apple, which has already cut its new iPhone 13 production run owing to supply chain disruptions and chip shortages, is instructing vendors to prepare for tamer holiday sales thanks in part to Omicron concerns, delivery delays and the broader impact on consumer spending from the highest levels of domestic inflation in more than 30 years.
"We believe that supply constraints will have a significant impact on Apple's top line in the coming quarters," said Crispidea analyst Faiz Zapdekar in a recent client note. "We believe that iPhone sales will be lower in FY22 due to the cyclical nature of iPhone demand. iPhone sales are also expected to suffer as a result of the pandemic's after-effects."
Apple shares were marked 3.25% lower in early trading Thursday to change hands at $159.30 each. The stock hit a record high of $170.30 each during the peak of yesterday's session.
Apple noted in late October that supply chain woes ripped $6 billion from its September quarter sales and expected the disruption to impact its current quarter revenues following a fourth quarter earnings report that included the tech giant's first miss of Wall Street sales forecasts in five years.
CFO Luca Maestri told investors at the time that December quarter sales would be "very solid", and likely hit a record high, while CEO Tim Cook said the group is "working with our partners on making sure that they have supply that we need and making sure that our demand statements are accurate as we see them."
Last month, the Nikkei business newspaper said iPad production runs are about half of their normal pace over the past two months, owing to Apple's decision to prioritize chips for its new iPhone 13, which it expects to generate stronger demand over the holiday season.