Apple Stock Loses Ground As China Covid Protests Threaten IPhone Output And Elon Musk Rips Tech Giant For “Censorship” In Its Treatment Of Twitter
Apple stock fell 3% today as it was hit by two headwinds — protests in China threatening iPhone production and claims of “censorship” lodged by new Twitter owner Elon Musk.
The more material challenge, at least in the near term, concerns the company’s all-important iPhone production pipeline, which has been hurt by protests across China against the country’s extreme, “zero-Covid” measures. Some accounts have describe the actions as the largest public anti-government demonstrations since the student uprisings in Tienanmen Square in 1989. Disruptions at Apple factories related to the protests could cut the output of iPhones by several million devices, just as the company heads into the home stretch of the holiday-season fourth quarter.
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Daniel Ives, an analyst with Wedbush Securities, wrote in a note to clients that Apple is “essentially caught in the crossfire heading into the all-important Christmas time period.” He estimates that up to 10% of Apple’s projected number of iPhone units could fail to materialize amid the protests at Foxconn factories. Inventory is off as much as 40% in many Apple stores, he noted, though the long-term viability of the hardware production arm of Apple remains intact as he sees it. Still, about 52% of the company’s $365 billion in total revenue in 2021 came from iPhone sales, so any disturbance to the production flow is a significant event.
Also today, Musk repeatedly ripped Apple in a blitz of tweets and replies, saying the tech company has threatened to remove Twitter (which Musk acquired last month) from its App Store, “but won’t tell us why.” Musk decried the threats as “censorship,” aiming to mobilize his 119 million followers on Twitter to take up his cause against Apple.
Apple shares, which have been unusually volatile in recent weeks, sank to $143.99 on slightly below-average trading volume. While the tech giant managed to stay at a break-even level at about $175 through last August as behemoths like Amazon and Meta experienced major sell-offs in their shares, Apple stock has since shed more than 15% of its value.
Designers of apps must always have their work thoroughly vetted before Apple will agree to make them available for downloading via its App Store, where it collects 30% of all proceeds generated by app purveyors. Existing apps in the store also undergo regular reviews as new versions are considered. In addition to drawing attention to the so-called “Apple tax” (the 30% fee), Musk accused Apple of “collusion with the government” and suppression of free speech. “The Twitter Files on free speech suppression soon to be published on Twitter itself,” Musk tweeted. “The public deserves to know what really happened …”
Apple has clashed with a number of app developers over the years, notably Fortnite video game maker Epic Games in a dispute that landed in court last year. A federal judge’s ruling in the case was mixed verdict but largely favored Apple. Epic has pursued an appeal, which remains pending.
Apart from the legal and financial aspects of the App Store, Musk’s latest efforts to stir the pot about “free speech” come after the Tesla billionaire was forced to go through with his $44 billion purchase of Twitter after he spent months trying to find a way to wriggle out of it. After he formally took over, he fired thousands of workers, including senior-level execs in charge of content moderation policies. Musk has been a frequent critic of the social media company’s efforts to limit expression on the platform, saying it instead should function as a “town square” with an open exchange of ideas. Many major advertisers have balked at the new atmosphere on Twitter, with many pausing their buys as the new era takes shape.
In order to reinforce his commitment to a new approach to content on Twitter, Musk overturned the ban on former President Donald Trump and has also personally contributed to a new atmosphere by retweeting conspiracy theories and white supremacist symbols. He also has sought to diversify Twitter’s revenue (about 90% of which came from advertising, per the most recent publicly available figures), instead aiming to charge users $8 a month for a verified, or “blue-check” account.
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