Tim CookSource: Apple

What you need to know

  • Goldman Sachs has issued a stark warning regarding Apple stock.
  • It says it expects iPhone shipments to drop 36% in Q3.
  • It has also downgraded Apple's stock to 'sell'.

Goldman Sachs has released a damning prediction regarding Apple's share price on the day of the iPhone SE launch.

As reported by Reuters:

Goldman Sachs said on Friday it expects iPhone shipment to drop 36% during the third quarter due to coronavirus-related lockdowns around the world and downgraded Apple Inc (AAPL.O) stock to "sell".

The brokerage noted that average selling prices for consumer devices are likely to decline during a recession and remain weak well beyond the point when units recover.

In a note, a Goldman Sachs analyst stated:

We do not assume that this downturn results in Apple losing users from its installed base. We simply assume that existing users will keep devices longer and choose less expensive Apple options when they do buy a new device."

Goldman Sachs also stated that it expects the 5G iPhone lineup to be delayed until November citing travel restrictions. This, however, is not new information, and it's likely that Goldman is actually basing its prediction on rumors regarding the iPhone 12 and possible delays.

There is no doubt that Apple's revenue across the year will be impacted mostly by its store closures, however, GS also seems to believe the longevity of Apple's devices and the decision to buy cheaper phones may harm Apple's bottom line.

The most telling sign of Goldman Sachs' gloomy outlook is the fact that they've downgraded Apple's stock to a 'sell' rating, encouraging investors to offload the stock because they think the price is going to go down.