Apple stock looks to snap four-day losing streak after report of improved iPhone Pro production

Shares of Apple Inc. moved higher on Thursday after four straight days of declines, as a report indicates that some iPhone production in China had improved — even as a reopening from COVID-19 lockdowns leaves the nation in flux.

apple AAPL,
+3.26%
stock was more than 3% higher in Thursday afternoon trading. Shares had fallen a collective 7% in their four-session losing streak, and are down 26.9% year-to-date, which would be the worst year for Apple since 2008. The S&P 500 index SPX,
+1.85%
is down 20.6% in 2022, while the Dow Jones Industrial Average DJIA,
+1.14%,
which counts Apple as a component, has fallen 9.5%.

The higher move came after a Wall Street Journal article on Thursday suggested shorter wait times for Apple’s premium iPhone Pro models and a rebound in production capacity at a Foxconn Technology Group 2354,
-2.49%
plant in the city of Zhengzhou that makes those phones, based on “people involved in the supply chain” as well as analysts. Apple relies on more expensive iPhone offerings — such as the iPhone 14 Pro Max — to boost revenue when demand for smartphones overall starts to cool off.

The production recovery would follow a COVID-19 outbreak in that factory in October, as well as harsh travel restrictions and worker protests that have hampered production, the Journal noted. Foxconn ended those restrictions earlier this month. But as the government ends most COVID restrictions more broadly, infections have spread more quickly, threatening the health of the factory workers.

JPMorgan analyst Samik Chatterjee, in a note on Tuesday, said “supply for the iPhone Pro models continues to improve slowly, with lead times moderating further in China, and a majority of SKUs are now available for in-store pickup across all geographies, including China for the first time since product launch.”

“Lead times for the Pro models are now tracking in line with lead times seen prior to the COVID outbreak in Zhengzhou, China, suggesting that supply is improving and
inching slowly towards parity with demand,” the note continued.

The Journal, citing other analysts, said that the segments of the Zhengzhou facility that made iPhones were running at roughly 70% capacity. In an effort to attract more employees, Foxconn, the Journal said, had offered incentives to some workers who were willing to work on production lines through March 20.

During its most recent round of quarterly results, Apple’s iPhone sales missed expectations. Analysts have raised questions about demand for the newer iPhone 14 models after reports of a planned pullback in production.

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