Apple said Monday that it sold more than 2 million iPhone 5s in China in their first three days of availability, setting a record for that market.
However, the news didn’t prevent a continuing decline in Apple (Nasdaq: AAPL) shares.
IPhone 5, which launched in China on Friday, will be available in more than 100 countries by the end of December.
The phone first went on sale on Sept. 21 in the U.S., Germany, France, Japan and five other countries, with more than 5 million of the phones sold in the first three days.
On Wall Street, the news wasn’t as good for Apple.
Apple shares dropped below $500 for the first time since February after Citigroup Inc. reduced its rating for the stock on concern that demand for the iPhone 5 is slowing.
Apple fell to $499 in premarket trading in. New York on Monday after declining 3.8 percent to $509.79 in Nasdaq Stock Market trading on Dec. 14. The Cupertino, California-based company’s stock has lost 27 percent from a closing peak of $702.10 on Sept. 19.
The company’s Asian suppliers have been reporting cuts in orders, which raises questions about the iPhone 5’s strength, Citigroup said in a note. The bank reduced Apple to neutral from buy and cut its price target to $575 from $675. Apple’s shares are heading toward their third monthly drop as the company faces competition from Samsung Electronics Co. and Nokia Oyj and had trouble meeting initial demand for the iPhone 5.
Citigroup joins at least four other banks in cutting Apple price estimates this month, according to data compiled by Bloomberg. UBS AG cut its price estimate for the stock to $700 from $780 on Dec. 14, citing concern that growth may slow for the iPhone and iPad. Apple component suppliers received order cuts as recently as last week, according to Peter Misek, an analyst at Jefferies & Co. who cut his estimate for the shares to $800 from $900 last week.
Li Yue, chief executive officer of world’s largest mobile company China Mobile Ltd., said this month that he won’t add the newest iPhone to his network until he’s offered a better deal. Nokia said Dec. 5 that China Mobile would sell its Lumia 920T smartphone as it expands in Europe and Asia.
The prospect of weak iPhone 5 shipments creates an earnings risk for Apple’s supply chain, and shares of those companies may come under selling pressure, Citigroup said.
That sales tally also set a record, but only beat last year’s iPhone 4S launch by a small margin, falling short of some analysts’ expectations. Apple shares hit an all-time high of $705.07 that day, but in the months since the stock has plunged about 28 percent.
Also on Sunday, Citi analyst Glen Yeung cut his rating for the Cupertino, Calif.-based company to “Neutral” from “Buy,” questioning the strength of iPhone 5 demand and saying that it’s unlikely Apple shares will rally any time soon.
(The AP and Bloomberg contributed to this report.)