Apple stock falls on muted iPhone demand and market share concerns

Investing.com -- Apple (NASDAQ:AAPL) shares dropped 1% in Tuesday’s pre-market trading as broader tech sector weakness emerged, spurred by renewed tariff concerns. A UBS analyst report highlighted a 1% decline in global iPhone sell-through in February, year-over-year, with significant underperformance in China and Europe.

The analyst commentary from UBS painted a picture of softening demand for Apple’s flagship product. Analyst David Vogt pointed out that iPhone sell-through units decreased YoY in the US, China, and Europe for the month of February. While the overall smartphone market remained relatively stable, Apple saw its market share shrink in key regions. In China and Europe, sell-through plummeted by approximately 17% and 12% respectively, suggesting that Apple is losing its footing in these crucial markets.

Despite gaining some market share in the US, where iPhone sell-through was down roughly 1%, the overall decline in the US smartphone market by about 5% YoY overshadowed this minor victory. Vogt noted that promotional activities were relatively mild, which may have contributed to the lackluster performance.

On a more positive note, Apple experienced growth in India and other markets, where iPhone sell-through surged by around 20% YoY, albeit from a lower base the previous year. However, initial response to the new iPhone SE model was described as "somewhat tepid," with sales figures trailing behind previous SE model launches.

In terms of market share, the iPhone’s global sell-through share dipped slightly YoY in February, settling at 17.7% compared to 17.8% in the same month the previous year, and significantly lower than the 20.2% in February the year before that. The report detailed regional breakdowns, with iPhone’s US market share increasing to 50.2%, up approximately 215 basis points YoY, but experiencing declines in China and Europe, where market share fell to 13.4% and 27.1% respectively.

"Based on our analysis of Counterpoint data, global iPhone unit sell-through was down 1% YoY in the month of February vs flattish market growth as Apple continues to cede share in key markets like China and Europe with sell-through down ~17% and 12% respectively," Vogt stated.

Investors appear to be reacting to these indications of Apple’s challenges in maintaining its market presence amidst heightened competition and market dynamics.

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