Investing 25-11-2022 19:27 15 Views

Here’s what protests at Foxconn plant mean for the Apple stock

Hundreds of workers at a Foxconn plant in China turned to violent protests this week after about a month of rather strict COVID restrictions.

Apple’s holiday quarter is now in question

That’s bad news for Apple Inc (NASDAQ: AAPL) considering the facility under distress is central to producing the iPhone.

Together with a slowdown in consumer spending, it could mean a disappointing holiday quarter for the tech behemoth, says Sophie Lund-Yates – the Lead Equity Analyst at Hargreaves Lansdown.

Weakening of consumer spending in the U.S. is a problem on its own. But then you look at supply problems and by some estimates, about 5.0% of iPhone sales will be affected, which will have a relatively big impact.

Versus the start of 2022, Apple stock is currently down just under 20% – meaningfully better than the rest of its mega-cap tech peers.

Is that a meaningful threat for the Apple stock?

Nonetheless, Lund-Yates expects the protests only to be a “dent” in Apple’s quarterly performance and not a “total derailment”.

She’s convinced the lowered iPhone sales on lack of availability will be deferred to the next quarter and not disappear in thin air altogether. Interestingly, the analyst doesn’t see it as much of a threat for the Apple stock either. On CNBC’s “Worldwide Exchange”, she noted:

Short-term will be volatile, but it’s possible that downward pressure related to supply chain issues is overdone. Apple has already successfully dropped the share of iPhone production away from Foxconn to other Asian countries. It’s proven that it can pivot its supply chain if needed.

Her constructive view is in line with Wall Street that also recommends buying Apple stock and sees upside in it to $175 on average.

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