Stock Price Of Apple And Amazon Drops Around 5 Per Cent; Apple Hit By Chip Shortage

by Bhaswati Guha Majumder - Oct 29, 2021 09:06 AM
Stock Price Of Apple And Amazon Drops Around 5 Per Cent; Apple Hit By Chip ShortageApple and Amazon
Snapshot
  • Apple's market capitalisation at the close of the session on 28 October and the post market dip reflects a loss of about $126.1 billion in market value.

    While, Amazon frightened investors by predicting that it may make up to $140 billion in holiday sales without making a penny in profit.

When markets open on 29 October, the previous day selloff in Apple Inc. and Amazon.com Inc. on the heels of disappointing earnings announcements may wipe off over $200 billion in combined market value.

Apple's stock dropped as much as 5 per cent after the company's revenue fell short of estimates due to supply issues. Similarly, Amazon dropped by a comparable amount after reporting lower-than-expected revenue and warning that rising costs could wipe out any profit in the Christmas quarter.

Apple had a market capitalisation of roughly $2.52 trillion at the close of the session on 28 October and the post market dip reflects a loss of about $126.1 billion in market value.

Meanwhile, Amazon closed with a market capitalisation of almost $1.75 trillion, and a 5 per cent post-earnings loss would shave off more than $87 billion from its value.

Amazon frightened investors by predicting that it may make up to $140 billion in holiday sales without making a penny in profit.

What had been a solid earnings quarter for the technology sector was overshadowed by the selling in the tech heavyweights. Alphabet Inc. and Microsoft Corp. both surged more than 4 per cent this week after reporting results that exceeded forecasts.

Chip Shortage Hit Apple

Tech behemoth Apple on 28 October announced robust profitability for the fourth fiscal quarter of fiscal 2021, with all-time highs in its services and Mac divisions.

According to a press release, the company reported a revenue of $83.4 billion, up 29 per cent year over year, and earnings per share of $1.24.

However, the company's earnings fell short of Wall Street's projections of $84.85 billion.

Apple CEO Tim Cook told CNBC that supply chain issues had a significant impact on financial results this quarter.

He said, “We had a very strong performance despite larger than expected supply constraints, which we estimate to be around $6 billion. The supply constraints were driven by the industry-wide chip shortages that have been talked about a lot, and Covid-related manufacturing disruptions in Southeast Asia.”

During the company's earnings call on 28 October, Apple stated that supply chain issues will cost it much more in the December quarter.

Additionally, Apple CFO Luca Maestri warned that owing to supply constraints, iPad sales will drop year over year in the December quarter, while other product categories would grow.

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