Portfolio holding Apple (AAPL) (0.6 units purchased @183.96) continues to struggle as new data regarding iPhone’s sales in China have been disclosed by the research firm Counterpoint. Taking into account the first six weeks of 2024, there was a significant worsening in the sales trend of the main product of the Cupertino company (–24% year on year). Also, Huawei, considered as Apple’s main competitor in the Chinese premium smartphones market, saw its unit sales rising sharply by 64%.
Looking at the Counterpoint report, it can be noticed how Apple and Huawei achieved different results with respect to their chinese market shares. Apple’s one went down to 15.7%, while Huawei’s share increased up to 16.5%. In addition to the fierce competition by Huawei, Vivo and Xiaomi are trying to reduce Apple’s market power through an aggressive pricing policy and, as a result of this, the US tech firm is subsidizing specific I-Phone models by around $180. Apple’s performance (-2.6% at 12.14 PM EST) partially reflects this negative news from Asia.
Another US company that is performing very poorly in the Chinese market is Tesla (TSLA) (-4.3% at 12:19 PM EST). In this case, we are witnessing this huge decrease in the share price mainly because of some issues Tesla is facing while trying to keep a constant level of electric vehicles sales in China. As pointed out by Barclays’ analyst Dan Levy, this negative result may also partially derive from the impact of Chinese New Year holiday on internal supply and, mainly, demand, but he also cites some important troubles in delivering Tesla is currently facing, such as production slowdowns related to Model 3 remodeling. Finally, Levy stresses one key concept: Tesla is still capable of growing exponentially in the Chinese market, despite strong competition by domestic firms (like BYD) and the unpredictability of local prices.
Author: Piero Foberti