Can Apple Save its Sinking Stock?
Earlier this week, Apple (NASDAQ: AAPL) held its event to unveil the iPhone 15 and its iterations. In years past, this has been a significant calendar event that has provided some decent bullish momentum for Apple’s stock. This year, it was the exact opposite. Shares of Apple closed the week lower by nearly 3.0%. The stock has been in a downtrend since it was reported that the Chinese government has banned its employees from carrying Apple’s iPhones. This report was denied by Beijing earlier this week but the news had little impact on Apple’s stock.
This brings us to our current conundrum: Can Apple save its sinking stock? I know we are heading towards a seasonally bearish part of the year at the end of September. Everyone and their dog knows that the last half of September is usually when the market pulls back ahead of the end-of-year rally. Apple’s stock began selling off when the report about Chinese government workers came out. But even after Beijing denied this report, Apple’s stock continued to decline. Usually, when bad news is negated, the stock will recover its losses. The fact that Apple did not is a little worrisome.
Have you ever heard the phrase: “Apple is the market”? It means as Apple’s stock goes, so too does the rest of the stock market. While that isn’t exactly true since other stocks like Microsoft ($415.5|0.45%) and Amazon ($178.22|0.83%) now carry significant weight in the S&P 500, Apple’s stock performance indeed weighs on the market more than other stocks. The recent bearish action might be a glimpse into what lies ahead for the rest of September.
Don’t Count Out Apple Just Yet
People who talk about Apple as being overvalued simply do not understand the value of the company’s brand. It has perhaps the greatest moat we have ever seen and a loyal fanbase that is willing to pay for premium products. Now, given the current economic climate, I think Apple’s status as a luxury product is what is holding it down. In what looks to be at least a mild recession, people simply do not have the money to fork over for a more expensive iPhone.
Will this be temporary? Absolutely. Let’s not count out the most valuable company in the world so easily. I do think that Apple needs to get back to innovating, rather than relying on moderate upgrades to existing products. What does that look like? The Apple Vision VR headset is certainly a start, although I don’t think AR/VR has had as much of an impact as we thought it would. Still, it shows that Apple is looking to move in new directions, even if the product is unlikely to be a major source of revenue for a few years.
I still think any pullbacks in Apple’s stock are worth looking at as a buying opportunity. Of course, you need to take into account the current trend of the market as well. Things could get a little bearish over the next few weeks, so keep that in mind. Apple is still a great investment, but I think in this case, patience will serve you better than buying every dip.