Why Apple Stock Is Falling Today

Apple Inc AAPL shares are trading lower Wednesday morning following reports the company intends to back off plans to increase iPhone production this year. 

According to a Bloomberg report citing people familiar with the matter, Apple told suppliers to pull back on efforts to increase the iPhone 14 product family by as many as 6 million units in the back half of this year "after an anticipated surge in demand failed to materialize."

Apple had reportedly increased its sales outlook ahead of the iPhone 14 launch and some of the company's suppliers had started preparing for a 7% boost in orders. 

The report suggests that the better-than-expected iPhone 14 Pro/Pro Max demand is likely being offset by weaker iPhone 14/14 Plus demand. As a result, Apple now aims to produce 90 million iPhones during the second half of the year.

Morgan Stanley analysts noted that the report aligns with the firm's expectations. 

"iPhone 14 Pro Max and Pro lead times in the US remain extended at 4-5 weeks, 2nd and 3rd longest of any model launched in the last 6 years, respectively. However, iPhone 14 and 14 Plus lead times are minimal at 2 days and 0 days, respectively," Morgan Stanley analysts wrote in a note to clients.

The analyst firm noted that the production estimate of 90 million is in line with its forecast. 

"However, it is still early in the iPhone 14 cycle, and the next 3-5 weeks will remain critical in determining the strength of the iPhone 14 cycle as the supply chain receives additional iPhone demand feedback from the early post-launch period and iPhone builds are re-calibrated accordingly," Morgan Stanley said.

Related Link: Is iPhone Demand Really Slowing Down? Apple Analyst Says This Data Point Proves Otherwise

AAPL Price Action: Apple has a 52-week high of $182.94 and a 52-week low of $129.04.

The stock was down 3.14% at $147 at time of publication, according to Benzinga Pro.

Photo: courtesy of Apple.