Apple's reign as the world's best stock is at risk since its bumpy start to 2024

(Bloomberg) — Apple Inc. has had its worst start this year by a single measure, as investors react to mounting pressure on the company, putting its longstanding position as the world's most valuable stock by market capitalization at risk.

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Shares of the tech giant fell 0.4% on Friday to close at around $181 after The New York Times reported that the Justice Department was closer to filing an antitrust case against the company. The decline marked Apple's fifth consecutive negative day, and its longest losing streak since October.

A potential antitrust case against Apple “would add to the raft of problems it faces, from sluggish iPhone sales to Watch patent issues,” Bloomberg Intelligence analyst Anurag Rana wrote in a note. “The lawsuit could attack Apple's business model of tightly integrating its devices and services.”

The Cupertino, California-based company has been the most valuable publicly listed company since July 2022, but has seen about $177 billion wiped off its market value so far this year, according to data compiled by Bloomberg. While the stock suffered larger percentage declines in the first week of January, the losses are the largest destruction of market value at the start of any year ever.

The downturn began earlier in the week after the tech giant suffered two downgrades, with analysts noting that a weak macro environment in China was weighing on demand for iPhones. This has reduced its lead over tech giant Microsoft – whose shares saw a less pronounced decline at the start of the year – to less than $100 billion.

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“Investors realize how rare it is for two people to be passive,” said Gene Munster, managing partner at Deepwater Asset Management. “I've covered this company for a long time and have never seen two downgrades before an earnings report.”

Apple is also likely to come under pressure as investors rotate their portfolios at the start of the year.

“Everyone is selling winners and buying losers,” said Brian Mulberry, client portfolio manager at Zacks Investment Management. “There is a big rebalancing going on right now.”

The losses pushed Apple's market value to about $2.8 trillion, approaching Microsoft's $2.7 trillion. Microsoft shares fell less than 0.1% on Friday to close at about $368.

The Windows software maker has benefited from the artificial intelligence trade that has fascinated Wall Street over the past year. The company is the largest shareholder in OpenAI and has invested about $13 billion in its parent company ChatGPT.

–With assistance from Matt Turner.

(Updates stock movements at market close, adds quote in third paragraph.)

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