Apple stock fell 3% today as it was hit by two headwinds: protests in China threatening iPhone production and ‘censorship’ allegations filed by new Twitter owner Elon Musk .
The biggest challenge, at least in the short term, involves the company’s all-important iPhone production pipeline, which has been hit by protests across China against the country’s extreme “zero-Covid” measures. Some accounts have described the actions as the largest public anti-government protests since the student uprisings in Tiananmen Square in 1989. Disruptions at Apple factories linked to the protests could cut iPhone production by millions of devices, while as the company heads into the home stretch of the fourth quarter holiday season.
Wedbush Securities analyst Daniel Ives wrote in a note to clients that Apple is “essentially caught in the crossfire ahead of the all-important Christmas period.” He estimates that up to 10% of Apple’s projected number of iPhone units may not materialize amid protests at Foxconn factories. Inventory is down 40% at many Apple stores, he noted, although the long-term viability of Apple’s hardware manufacturing arm remains intact, he said. Still, about 52% of the company’s $365 billion in total revenue in 2021 came from iPhone sales, so any disruption in workflow is a significant event.
Also today, Musk repeatedly ripped Apple in a series of tweets and replies, saying the tech company threatened to remove Twitter (which Musk acquired last month) from its App Store, “but don’t tell us. won’t say why”. Musk called the threats “censorship,” aimed at mobilizing his 119 million Twitter followers to make his case against Apple.
Apple shares, which have been unusually volatile in recent weeks, fell to $143.99 on slightly below average trading volume. While the tech giant managed to stay at a break-even point of around $175 until last August, when juggernauts like Amazon and Meta saw massive sell-offs in their shares, Apple stock has since lost more than 15% of its value.
App makers must always have their work thoroughly vetted before Apple agrees to make them available for download through its App Store, where it collects 30% of all revenue generated by app providers. Existing apps in the store are also subject to regular reviews as new releases are considered. In addition to drawing attention to the so-called “Apple tax” (the 30% fee), Musk accused Apple of “colluding with the government” and suppressing free speech. “Twitter files about suppressing freedom of speech will soon be posted on Twitter itself,” Musk tweeted. “The public deserves to know what really happened…”
Apple has clashed with a number of app developers over the years, including Fortnite video game maker Epic Games in a dispute that landed in court last year. A federal judge’s decision in the case was a mixed verdict but largely in favor of Apple. Epic pursued an appeal, which remains pending.
Besides the legal and financial aspects of the App Store, Musk’s latest efforts to stir the pot on ‘free speech’ come after billionaire Tesla was forced to complete his $44 billion purchase of Twitter. after spending months trying to find a way out. After officially taking office, he fired thousands of workers, including senior executives responsible for content moderation policies. Musk has frequently criticized the social media company’s efforts to limit expression on the platform, saying it should instead function as a “town square” with an open exchange of ideas. Many big advertisers have balked at the new atmosphere on Twitter, with many pausing on buying as the new era takes shape.
To reinforce his commitment to a new approach to content on Twitter, Musk unbanned former President Donald Trump and also personally contributed to a new atmosphere by retweeting conspiracy theories and symbols of white supremacy. He also sought to diversify Twitter’s revenue (about 90% of which came from advertising, according to the most recent publicly available figures), aiming instead to charge users $8 a month for a verified or “blue-check” account. “.
Apple did not immediately respond to Deadline’s request for comment on Musk’s accusations.
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