HP’s shares decline due to subsiding PC demand

Due to the pandemic, the supply of raw materials has been disrupted and most of the production lines have been forced to shut. However, the global supply of PCs remains strong and the company’s leading global PC supply right now is Lenovo and HP.

The Chinese PC maker holds the first spot in the PC sales race, however, HP follows the leader with only a 1% difference of shares in the global supply market. however recently, HP Inc. shares have dropped as much as 4.7%, amid concerns about a potential for ebbing demand and ongoing supply shortages.

This suggests that though the company is performing well, however, the actual demand for PCs has been started to slow down. the shares have dwindled quite a bit and the company is still increasing its capacity of the production plants to meet the demands brought forth by a boom in work from home culture and remote learning scenarios.

However, as the demand has slowly started to die down, the inventory is being filled with products that have outlived their usefulness and could only be sold at a less price.

Below is the data compiled regarding HP, by Bloomberg.

• Last week, research firm IDC data showed global PC shipments grew 55% in the first quarter of 2021 from the same period the prior year, a pace that analysts suspect may difficult to maintain; and separately, an Evercore analyst writes that demand-side data showed mixed signals
  • “While demand potential in the commercial segment appears strong, early indicators may suggest consumer demand has begun to slow somewhat as spending priorities shift post-a year of aggressive PC buying.”
• “With supply constraints limiting production, rising inventory levels could also signal slowing PC demand in the consumer and education markets, which have been strong for the past year.”
• HPQ trading in options rising to more than three times the 20-day average for this time of day
• HPQ has 8 buys, 5 holds, 4 sells; avg. $33.

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