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.

These hurdles make it far more likely that Apple re-opening its retail stores will be delayed, rocky, and in a patchwork format unlike its China-stores restart.

Consumers Less Likely To Spend On High-Priced Apple Products During An Economic Crunch

Even if Apple stores fully re-open, the economic and consumer spending environment right now, and for the upcoming future, does not look like one that will favor Apple. The fact that in two weeks the U.S. posted more new weekly unemployment claims than in the entirety of the Great Recession and the highest net job losses since 2009 as well means U.S. consumers aren't looking to spend $1,000 on the latest new iPhone or iPad, and a few hundred more on AirPods, but rather just trying to refocus on paying rent or putting food on the table.

The original 4GB iPhone cost $499 in 2007, about $622 in 2020 dollars.  Now Apple's new iPhones regularly and easily reach into the $1,000 or more range and not including accessories such as AirPods and wireless chargers which can easily add more costs and are far more expensive than their counterparts of years past.

(Source: Digg)

While in the midst of the Great Recession Apple did post substantial gains in product sales and net revenue nonetheless it seemed at the time to be primarily a function of increasing market share to smartphone competitors and back when an iPhone was comparatively cheaper than what we are used to in recent years for Apple. With Apple nowadays the far-and-away leader in U.S. smartphone market share it does not seem likely that can be repeated as a way for Apple to continue to post growth during a downturn. Apple is already seemingly considering delaying its iPhone 12, its high-touted 5G model with estimated price ranges of between $700 and $1000 for various permutations, with reports saying it seemingly is due to worries over the economic and consumer environment of the upcoming half-year and the dent that may have on the release's potential.

Strong Cash Liquidity And A Services Cushion

It is likely that by this time next year things will have returned largely back to normal in terms of the consumer and macro environment, and Apple has ample cash to weather this crisis as it had over $163 billion in current assets as of the end of 2019, but the above all foment a difficult environment for Apple and of uncertain duration in the meantime. At the onset of the coronavirus pandemic Apple guided that they were facing significant supply chain disruptions within China as well as severe disruptions to demand. While that situation currently appears largely reversed within China the rest of the world is experiencing that on a scale seemingly more widespread and of greater duration.

On the positive side companies that are services-oriented are generally seeing boosts in usage, a major driver behind Microsoft's revenue and stock price cushioning amid this pandemic, and Apple's increasingly-important services revenue is no exception. While Apple faces risks to its services revenue due to it largely being consumer-facing and the above-described hit to consumer spending may similarly reduce people's willingness to spend on mobile games, dating apps, fitness trackers, and the like, nonetheless the usage boost from people being confined to home means services revenue is likely to be cushioned more than hardware sales.

Apple's Multiple Should Head Towards Its Historical Mean

In this kind of economic and consumer environment it is very likely Apple sales will see a massive hit for the next 1-3 quarters as its core product lines face a seemingly insurmountable hurdle and its primary geographic focuses are the regions most deeply affected by the coronavirus pandemic and associated shutdowns. If the economic health of consumers continues to nosedive we may see this create deep worries too for Apple product spending as consumers refocus on necessities over discretionary and given Apple's far higher price points for its products than in the Great Recession.

On the positive end Apple is flush with cash and liquidity, its growing services revenue component may not be as badly hit, its China segment is seemingly rapidly rebounding, and the stock price has already collapsed immensely since the pandemic began. At $240 and a P/E ratio of 19 it is not hard to imagine Apple stock will falling somewhat further in-line with times, not even in downturns, where it has not had rich and optimistic mega-growth expectations built into its price as before the pandemic began.

(Source: MacroTrends)