Apple falls on worries of flat iPhone production, increased labor costs
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Apple (NASDAQ:AAPL) shares fell early Thursday after multiple media reports indicated the potential for slowing revenue growth and increased costs as a result of broader economic conditions.
Bloomberg reported the tech giant is looking to keep iPhone production "roughly flat" this year, pointing to a difficult environment for consumer electronics, notably smartphones.
According to the news outlet, which cited people familiar with Apple's (AAPL) projections, Apple has asked suppliers to build roughly 220 million iPhones, approximately the same as 2021.
The news outlet added that forecasters were expecting builds of 240 million units, due in part to the expected iPhone refresh later this year.
Separately, The Wall Street Journal reported that Apple (AAPL) is raising pay for store employees and corporate employees, citing a tight labor market and the increased unionization talk at some of its stores.
Apple (AAPL) shares fell slightly less than 1% to $139.87 in premarket trading on Thursday.
Cupertino, California-based Apple (AAPL) did not immediately respond to a request for comment.
The report on iPhone production comes after several Wall Street analysts saw various outlooks for the smartphone, Apple's (AAPL) largest driver of revenue.
On Wednesday, investment firm Loop Capital cut its price target and said Wall Street's estimates for iPhones shipped in the June quarter may be too high. Analyst Ananda Baruah lowered the per-share price target on Apple (AAPL) to $180 from $210, noting that Wall Street's iPhone estimates for the upcoming quarter could be anywhere between 4 million and 6 million higher than what the tech giant is likely to ship.
However, investment firm UBS said on Monday that it saw the highest purchase intent in China for the Apple (AAPL) iPhone in six years, following a recent survey.
Analyst David Vogt noted that purchase intent in China rose nearly 6% year-over-year, the highest in six years, which suggests "the iPhone 13 series is driving share gains from local brands."
Earlier this month, investment firm Wedbush Securities noted iPhone supply chain checks have been "surprisingly resilient" despite China's COVID-related lockdowns.
"The China issues and supply chain should be peak worry in the June quarter and then subside into the key September/December quarters on the heels of a new iPhone 14 launch," analyst Dan Ives wrote in a note to clients, adding that the initial production plans for the next iPhone "should be up modestly" compared to the iPhone 13.
In April, Apple (AAPL) Chief Financial Officer Luca Maestri warned that June revenue would likely be impacted by $4 billion to $8 billion, due to COVID-related supply constraints and the continued chip shortage.
On Wednesday, Apple (AAPL) started to roll out its Tap to Pay on iPhone service to some of its own retail stores, with the feature eventually letting small businesses take credit card payments directly from their iPhone, without the need for additional hardware.