At its lowest point, Apple’s stock price dropped 13% during Monday’s mass stock market selloff caused by concerns over China’s economic woes. Apple’s CEO, Tim Cook, helped turn that around with comments he made to CNBC’s Jim Cramer, reassuring investors of the company’s stability in China.
“I get updates on our performance in China every day, including this morning, and I can tell you that we have continued to experience strong growth for our business in China through July and August,” Cook told Cramer in an e-mail. “Obviously I can’t predict the future, but our performance so far this quarter is reassuring.”
The response seemed to have an almost immediate impact. Following the comments, Apple’s stock rose dramatically, ending the day down by only 2.5%.
“Growth in iPhone activations has actually accelerated over the past few weeks, and we have had the best performance for the App Store in China during the last 2 weeks,” the Apple CEO added in his comments to Cramer.
Apple’s ability to exploit the Chinese market is an important key to the future growth of the Cupertino, Calif., company. Cook said “China represents an unprecedented opportunity over the long term.”
The world’s most valuable company when it comes to market capitalization, has steadily gained momentum in China after signing a deal to sell the iPhone through China Mobile, the world’s largest carrier.
But while Cook’s comments may have stifled panic, there may be some legal fallout from the way Cook released the comments. Regulatory experts are looking into whether his comments violated rules laid out in the Securities and Exchange Commission’s fair disclosure regulations that stipulate a company must share information with all of its investors at the same time.
Since Cook only sent his comments to CNBC’s Cramer, there may be issues from other stakeholders who weren’t privy to the comments.
Overall, Apple’s stock has declined 22% over the last few months due in part to fears about the Chinese economy.
In spite of the volatility, Wells Fargo Securities has upgraded its rating for the device maker from “market perform” to “outperform,” calling the mass selloff of the company’s stock an overreaction.
“While we note that our fundamental stance on Apple’s challenges are unchanged, we believe shares have over-corrected,” market analyst Maynard Um said of the reason for the upgrade. “Tim Cook’s e-mail to CNBC’s Jim Cramer that iPhone activation growth in China ‘has actually accelerated over the past few weeks’… gives us better visibility to the September quarter.”
As of publishing time, Apple’s stock is up by around 5% from yesterday.
