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Apple (AAPL) stock drops as company expects $4-8 billion hit in Q3 2022 from supply constraints

Apple stock was doing well on revenue and EPS beats in Q2 2022, but the mention of COVID causing supply restraints in China caused it to plummet.

TJ Denzer

April 28, 2022 2:42 PM

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One of the biggest issues facing the tech industry right now is the effect of COVID on supply lines and factories around the world, and especially in China where cases have spiked and caused shut downs throughout the industrial sector. Apple might be one of the biggest and most profitable tech companies in the world, but even it isn’t exempt from these issues. Where it originally had a win and looked strong coming out of its Q2 2022 earnings results, its stock then dropped on word of COVID in China causing supply constraints which could amount to around $4 billion to $8 billion USD in Q3 2022.

This tidbit of information was shared during the Apple conference call accompanying its Q2 2022 results on April 28, 2022. It was CEO Tim Cook himself who shared details of the effects of COVID on the company’s supplies and resources. Ultimately, Tim Cook revealed that said constraints could cause the company to face losses amounting to an estimated $4 to $8 billion in the coming Q3 2022.

Apple reported a good finish on its Q2 2022 earnings results. The company was able to put up a massive win in revenue and a decent enough victory on earnings-per-share (EPS) as well. This had the stock edging upwards towards a high of about $167.40 per share. However, this high wouldn’t last. After Tim Cook dropped the supply constraint bombshell during the following conference call, the stock took a sharp drop down to a low of about $156.25 per share as of this writing. It doesn’t help that the company also announced it would be adding $90 billion to its stock buyback program, which also pushed the stock down, though not nearly as much.

Either way, for all of Apple’s victories in Q2 2022, the standout detail will end up being the expectation of a major loss due to supply constraints in Q3 2022. We will see if it can overcome this issue and offset the expected losses, but that remains to be seen in the next earnings results. Stay tuned for further tech company financial reporting as quarters close out throughout the coming weeks

TJ Denzer

Senior News Editor

TJ Denzer is a player and writer with a passion for games that has dominated a lifetime. He found his way to the Shacknews roster in late 2019 and has worked his way to Senior News Editor since. Between news coverage, he also aides notably in livestream projects like the indie game-focused Indie-licious, the Shacknews Stimulus Games, and the Shacknews Dump. You can reach him at tj.denzer@shacknews.com and also find him on Twitter @JohnnyChugs.