Apple Shares Downgraded Due To Growth Slowdown

Rosenblatt Securities downgraded Apple to a “sell” rating from a “neutral” one on Monday (July 8), according to a report by CNBC.  

The firm said there is “less reward” in owning Apple shares, even though it didn’t think the stock was a short.

“We believe Apple will face fundamental deterioration over the next 6 to 12 months,” analyst Jun Zhang said in a note to clients. The 12-month price target of $150 didn’t change, however. 

“Adding to our ‘sell’ thesis, we believe new iPhone sales will be disappointing, iPad sales growth will slow in the second half of 2019, other product sales growth, such as the HomePod, AirPod, and iWatch, may not be meaningful to support total revenue growth,” Rosenblatt said.

In midday trading, Apple shares were down 2.12 percent, and the company said it will report Q3 earnings on July 30 after the bell is rung.

In other Apple revenue news, Apple’s App Store continues to outpace the Google Play Store when it comes to consumer spending, and total app revenue for both stores reached $39.7 billion worldwide, according to reports.

That number represents the first half of the year, and it’s an increase of 15.4 percent from the $34.4 billion from the same time period last year.

Global users spent around $25.5 billion in the App Store, which is a 13.2 percent year-over-year increase from last year. That number is 80 percent higher than Google Play’s estimated revenue of $14.2 billion, which is almost 20 percent higher than it was a year ago.

Total growth overall is down due to slower iOS growth in China, but analysts said they think China will get back to positive growth in the next year.

Another factor in the downturn could be Netflix’s decision to stop in-app subscriptions for both the App Store and Play Store. The numbers will steadily decline, especially because Netflix was the second-biggest non-game app in terms of earnings in the first half of the year at $339 million. That number is down from $459 million a year ago, when it was the No. 1 non-game earner. That distinction now belongs to Tinder, which made $497 through both app stores.