Apple's market cap falls below $2 trillion on Tuesday

The ‘big tech’ industry in the U.S., led by Apple and Tesla, is shaky. It is the result of the economic slowdown in the U.S. and China. The market capitalization of Tesla and five big tech companies, often called FAANG, fell by four trillion dollars last year, and there are concerns that such a trend will continue in the new year.

On Tuesday (local time), the first trading day of the new year for the New York stock market, Apple’s stock price fell by 3.7 percent from the previous trading day. While Apple was the only company that stayed above the market capitalization of two trillion dollars last year despite a collapse in global stock markets, it could not avoid the effect of concerns about an economic downturn. Its stock market value, the highest in the world, also fell below two trillion dollars. Tesla’s stock price also fell by 12.2 percent on Tuesday, continuing the ‘Tesla shock.’ As a result, all three major New York stock market indexes fell on Tuesday, forewarning a depressing new year.

A sense of crisis is arising due to a sharp increase in the number of COVID-19 cases in China and the direct impact of demand slowdown caused by interest rate hikes in various countries. Both Apple and Tesla are highly dependent on China for production and sales. Japan’s Nikkei Asia reported that Apple ordered its part manufacturers to produce less volume of parts for AirPods, Apple Watch, MacBook, etc., starting last month because of decreasing demand.

Tesla is experiencing a leadership crisis on top of demand decreases due to its CEO Elon Musk’s scandalous behavior. The company delivered 1.31 million cars last year, which is 40 percent more than the previous year. However, it is still below the market n of 50 percent, which raised a pessimistic view of the electric vehicle market in the new year. Tesla’s stock price fell by 65 percent last year – 44 percent in the last month alone. JP Morgan and others lowered a target stock price for Tesla.


Hyoun-Soo Kim kimhs@donga.com