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Why Did Apple (AAPL) Stock Dip Today?

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Shares of Apple (AAPL - Free Report) dipped more than 2% in morning trading Monday after Japanese financial publication Nikkei reported that the company is halving its production target for the iPhone X in the first three months of the year.

Apple was planning to produce 40 million units of its special-edition phone, but the Cupertino, California-based firm has informed suppliers that it now expects to produce just 20 million units, Nikkei said.

According to the report, Apple’s adjusted production target comes on the back of “slower-than-expected sales” in the holiday shopping period in key markets like Europe, U.S., and China. Nikkei also mentioned that production of the iPhone X faced a components shortage in the wake of its launch, so production can now start to slow as inventory begins to rise.

Meanwhile, the report indicated that Apple is expected to maintain a total production target of 30 million units for its lower-priced models such as the iPhone 8, iPhone 8 Plus, and iPhone 7. Nikkei suggested that the iPhone X’s higher starting price of $999 could be cutting into demand.

Today’s news comes just a week after a key analyst hinted that Apple might discontinue the current iPhone X when the second-generation model launches later this year.

“iPhone X would hurt product brand value & lineup of 2H18 new models if it continues to sell at a lower price after 2H18 new models launch,” wrote Ming-Chi Kuo of KGI Securities.

Apple will report its fiscal first-quarter earnings results later this week. Based on our latest consensus estimates, the company is expected to post total iPhone unit sales of 79.791 million, up about 1.9% from the 78.290 million reported in the prior-year quarter.

Total iPhone-related revenues are projected to come in at $59.313 billion, based on our consensus estimate. This would represent year-over-year growth of roughly 9.1%. Overall, total revenues are expected to hit $86.02 billion, up nearly 9.8% from last year.

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