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China’s iPhone clampdown is considered a monstrous threat to Apple, leading to falling stocks and negative forecasts. Nonetheless, some analysts refuse to believe the ban will significantly affect Apple.
To start, Wedbush’s Dan Ives is sanguine about Apple despite the ban, saying that the Cupertino giant might even see a boost in sales next year due to its weak 2023 in the Asian country. Ives addressed in a CNBC report the stock drops experienced by Apple after the announcement of the ban and said that reports’ “bark is worse than the bite.” In the worst-case scenario, the analyst believes that it would only cost Apple to lose 500,000 units, which is far from the 5 to 10 million units reported by analysts at Bank of America.
The seriousness of the ban is also being questioned through a recent Reuters report, revealing that some places where it is expected seemingly don’t implement it.
It was not immediately clear how widely the ban was being enforced, with a third source at one of the three ministries saying he was still using an iPhone and had not yet heard about the restriction.
A fourth source, at a Chinese regulatory body, said they had not been explicitly barred but were told they would be held responsible should any issues emerge with their use of iPhones.
This opposes other reports stressing the severity of the clampdown. According to Bloomberg, after the ban to government officials, China will soon push it to “state-owned enterprises and other government-controlled organizations.” Meanwhile, a separate report by The Wall Street Journal claims that government agencies have already informed employees that they can no longer use iPhones for work or even bring them to workplace premises.
With all this, aside from Ives, other experts started a positive forecast for Apple despite the situation. One includes investment bank Morgan Stanley, which advised investors to stay with Apple despite the initial stock drop it experienced last Wednesday and Thursday, wherein its stock price fell to 3.6% and 3.29%, respectively. The bank also echoed Ives’ statement, saying China’s ban is considered “more bark than bite” and “unwarranted.”
“We believe Apple’s 2-day -6% stock move suggests the market thinks recent China headlines will evolve into something broader,” Morgan Stanley said in its recent investors’ note. “We believe that’s unlikely. In a worst case scenario, we see 4% rev and 3% EPS downside, suggesting the stock move is overdone.”
Morgan Stanley further cemented its statements, saying China relies on Apple in some ways due to the employment it brings to its citizens. Yet, the bank still acknowledged the power of China in the situation. “China could potentially be on the path to becoming more nationalistic, a move that would put over $30B of operating profit (over 20% of AAPL’s total OP$) at risk, should China decide to limit Apple’s access to the Chinese market,” it added.
JP Morgan affirmed this idea in a recent note to investors, albeit it said that Apple wouldn’t be really affected by the move. According to the investment company, Apple’s problem in China will just grow bigger. Moreover, it claimed that “the restrictions are coinciding with the recent launch of Huawei Mate 60 Pro and the restrictions will make it tougher for Apple to continue to deliver share gains in the local market.” It also claimed that the iPhone 15 line has no “material upgrades,” pushing it to drop its stock target for Apple from $235 in August to $230 this week. Hence, even though Apple might remain generally resistant to the ban’s effects, its iPhone 15 is not safe from other global issues, including competition.
