The stock market value of Apple has dipped below $1tn (£770bn) after the decision to stop revealing how many handsets it sells stoked concerns among investors that iPhone sales have peaked.
The tech company’s shares fell sharply on Friday as investors digested a slowing sales picture coupled with reduced financial transparency, after management said that from now on it would withhold the key sales measure from analysts.
Apple, co-founded to sell personal computers by the late Steve Jobs in 1976, became the first company to be valued at $1tn in August when its shares topped $207.05 for the first time. But on Friday, the shares were down 7%, falling below $206.50 at lunchtime in New York to take the company’s stock market valuation under $1 trillion. By close on Friday the shares had pared their losses to finish at $207.48 – above the $1 trillion mark. Nonetheless, the shares were changing hands for $233 last month.
After Wall Street closed on Thursday, the Apple chief executive, Tim Cook, delivered a double dose of bad news at its quarterly sales update.
He warned sales for the Christmas trading period could fall short of Wall Street’s forecasts, a slowdown that indicated the recent wave of expensive handset launches had disappointed.
The company also said it would stop publishing the volumes of phones, tablets and laptops sold in the period.
Apple has provided investors with this information for the past 20 years, with the upward trajectory of iPhone sales in particular over the past decade helping drive its market value up.
Both analysts and investors used it to calculate the average selling price of Apple’s devices and gauge the company’s financial health. The decision to withhold the information was interpreted as a sign that Apple anticipates years of growth in the number of iPhones sold coming to an end, overshadowing what was a record quarter for the California-based company.
However, Apple’s finance chief, Luca Maestri, claimed the number of units sold was “less relevant today than it was in the past” because it now had a wider range of products at different prices.
“Customers don’t just buy phones any more, they also purchase wireless headphones or subscriptions at the same time,” the company said. At a result, shareholders should focus on revenues and profit margins, Maestri said.
But Walter Piecyk, a telecoms analyst at BTIG Research, said: “This is not a good look for Apple. Companies typically stop reporting metrics when the metrics are about to turn.”
Piecyk said the reporting changes raised questions about whether iPhone sales peaked in 2015, when the company sold 231m handsets.
The update on Thursday showed iPhone sales in the three months to 29 September were level with the same period a year ago, despite the launch of the more expensive XS and XS Max models in the final fortnight of the quarter.
Apple sold 46.9m iPhones in the quarter, generating sales of $37.2bn, but eyebrows have been raised by escalating price tags that are stretching the wallets of even the most devoted Apple fans. The iPhone XS costs £999, while the larger-screened XS Max is £1,099. It will now be hard to tell how well new handsets have sold.
The company also argues the quarterly numbers and prices do not necessarily tell the whole story, as it diversifies into other business areas. Apple’s services arm, which includes iCloud and Apple Music subscriptions, had a turnover of close to $10bn in the period.
Michael Hewson, the chief analyst at CMC Markets, said the decision to withhold sales volumes suggested the company feels the market may have hit “peak iPhone”.
But he added: “Judging by the sales numbers that does seem likely, but when your average selling price rises to $793 a unit, due to the launch of higher spec and higher-priced products, who really cares?”
