By Senad Karaahmetovic
Shares of Apple (NASDAQ:AAPL) are down nearly 2% in pre-market Monday trading after protests against strict COVID measures erupted across China over the weekend.
Students staged protests at many universities while people took to the streets in Beijing, Shanghai, Wuhan, and Lanzhou.
“The path to re-opening is likely to be noisy with local infections at risk of remaining high in winter months and until vaccination rates rise more meaningfully,” Citi strategists said in a note today.
“While the setback to sentiment from protests in mainland and tightening of COVID restrictions in several cities are unlikely to bode well for sentiment, we are cautious not to interpret these as overly bearish.”
Wedbush analysts added that China’s “head-scratching” zero-COVID policy has reached a tipping point, placing companies like Apple in a difficult position.
“We estimate that Apple now has significant iPhone shortages that could take off roughly at least 5% of units in the quarter and potentially up to 10% depending on the next few weeks in China around Foxconn production and protests. In many Apple stores we are seeing major iPhone 14 Pro shortages of up to 35%/40% of typical inventory heading into December with online channels pushing deliveries into early January in many cases depending on model/storage/color,” they wrote in a client note.
The analysts added that the China situation “has been an absolute gut punch to Apple's supply chain.” They see “brutal” supply chain issues as a continued near-term overhang over the Apple stock. The tech titan is “at the mercy of China's zero COVID policy which remains a very frustrating situation.”
Apple stock price closed at $148.11 on Friday.