Shares of Apple (NASDAQ: AAPL) sank late Wednesday following the iPhone maker’s announcement that it had lowered its revenue guidance for Q1 citing unexpectedly weak sales in China, among other factors.
After the bell on Wednesday, Apple said that it expected first quarter revenue of $84 billion compared to the previous guidance range of between $89 billion and $93 billion. Analysts were expecting revenue of $91.3 billion.
On the announcement, shares tanked around 7% in after-hours trading.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” the note from Apple’s Tim Cook said regarding the lowered revenue guidance. “We believe the economic environment in China has been further impacted by rising trade tensions with the United States.”
In an e-mailed statement to CNBC’s Scott Wapner, billionaire fund manager Jeffrey Gundlach warned that the move in Apple is “the kind of stuff that happens in a bear market.”
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Gundlach has been vocal in the last month, warning that the market would hit new lows in December and said on December 17, “I’m pretty sure this is a bear market.”
“We’ve had pretty much all of the variables which characterize a bear market,” Gundlach said. “I think we’ve had the first leg down and the second leg down is usually more painful than the first leg down.”
Since then, the S&P 500 dropped more than 20% from its record high with a dramatic slump on Christmas Eve. It has since risen a bit, but is still down 15% from its high.
Gundlach, who oversees more than $123 billion in assets as the chief executive of DoubleLine Capital, also warned that the pain isn’t close to over.
“I think this lasts a long time. It has a lot to do with the fact that, I believe, that we’re in a situation that is … highly unusual – that we’re increasing the budget deficit so spectacularly so late in the cycle while the Fed is hiking interest rates,” Gundlach said.