Apple Could Still Be In For More Pain

Apple's weaknesses in the current coronavirus environment stems from its focus on consumer retail, whether for its hardware products or even to some degree its services.

Due to shutdowns and social distancing, consumers outside of China are unable to visit Apple stores or other retailers to browse and purchase Apple hardware products for an uncertain and seemingly long upcoming time frame, likely resulting in a sharp contraction in upcoming sales for its core geographic revenue sources.

The skyrocketing mass unemployment also creates an environment where consumer discretionary income is likely to be squeezed. Consumers may be less apt to spend, even if they still are employed due to perhaps worries about the economic environment going forward, on a new high-strung iPhone, fancy accessories, or micro-transaction services purchases and all of which have been the major drivers of Apple's growth in recent years.

Apple's Regional Focuses Are Hardest Hit By Coronavirus

As shown below Apple's sales are heavily tilted towards the Americas and Europe, both of which are essentially almost entirely shut down at the moment to the ability of the consumer to peruse an Apple store and pick up one (or more) new Apple products.

While Apple has re-opened all of its stores in China after only a month of shutdowns nonetheless such an optimistic timeline clearly is not in store for the bulk of the rest of its operations as it appears Apple will keep its ex-China stores closed until at least early May, marking at minimum a broad two-month closure to when its ex-China stores closed on March 13.

(Source: Apple Q4 2019 Earnings Report)

Apple doesn't even have necessarily a major say in when it can re-open its Apple stores ex-China. Many nations have implemented forced lockdowns closing all but essential businesses, with consumer technology retail stores like Apple being questionable as to if they fall into the permitted essential categories even if the stores try to re-open. Furthermore many Apple stores in the United States are in malls, which have either voluntarily shut down operations or were specifically told by state governments to close.

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Disclaimer: These are only my opinions and do not constitute investment advice.

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